AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 1999
REGISTRATION NOS. 333-5039
811-7643
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 5 |X|
AND/OR
REGISTRATION STATEMENT
UNDER
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 7 |X|
(CHECK APPROPRIATE BOX OR BOXES)
-------------
PHOENIX-ABERDEEN SERIES FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
-------------
101 MUNSON STREET, GREENFIELD, MASSACHUSETTS 01301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
C/O PHOENIX EQUITY PLANNING--SHAREHOLDER SERVICES
(800) 243-1574
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
-------------
PAMELA S. SINOFSKY
ASSISTANT VICE PRESIDENT
AND ASSISTANT COUNSEL
PHOENIX INVESTMENT PARTNERS, LTD.
56 PROSPECT STREET
HARTFORD, CONNECTICUT 06115-0479
(NAME AND ADDRESS OF AGENT FOR SERVICE)
-------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
|X| on November 26, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
================================================================================
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
UNDER THE SECURITIES ACT OF 1993
PART A
INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
- ----------------------------- ------------------
<S> <C> <C>
1. Front and Back Cover Pages................................ Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance...... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table............................ Fund Expenses
4. Investment Objectives, Principal Investment Strategies,
and Related Risks....................................... Investment Risk and Return Summary
5. Management's Discussion of Fund Performance............... Performance Tables
6. Management, Organization, and Capital Structure........... Management of the Fund
7. Shareholder Information................................... Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things to Know When Selling Shares; Account
Policies; Investor Services; Tax Status of
Distributions
8. Distribution Arrangements................................. Sales Charges
9. Financial Highlights Information.......................... Financial Highlights
</TABLE>
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------------------- -------------------------------------------
<S> <C> <C>
10. Cover Page and Table of Contents......................... Cover Page, Table of Contents
11. Fund History............................................. The Fund
12. Description of the Fund and Its Investment Risks......... Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund................................... Management of the Fund
14. Control Persons and Principal Holders of Securities...... Management of the Fund
15. Investment Advisory and Other Services................... Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices................. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities...................... Other Information
18. Purchase, Redemption, and Pricing of Shares.............. Net Asset Value; How to Buy Shares; Investor
Account Services; Redemption of Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund..................................... Dividends, Distributions and Taxes
20. Underwriters............................................. The Distributor
21. Calculation of Performance Data.......................... Performance Information
22. Financial Statements..................................... Financial Statements
</TABLE>
PART C
INFORMATION REQUIRED TO BE INCLUDED IN PART C IS SET FORTH UNDER THE
APPROPRIATE ITEM, SO NUMBERED, IN PART C OF THIS REGISTRATION STATEMENT.
<PAGE>
Phoenix Investment Partners
Prospectus
November 26, 1999
- -------- ABERDEEN
Phoenix-Aberdeen
Global Small Cap Fund
Phoenix-Aberdeen
New Asia Fund
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or disapproved
of these securities or determined if this
prospectus is truthful or complete. Any
representation to the contrary is a
criminal offense.
This prospectus contains important
information about the Phoenix-Aberdeen
Global Small Cap Fund and The Phoenix-
Aberdeen New Asia Fund that you should
know before investing. Please read it
carefully and retain it for future
reference.
[logo] PHOENIX
INVESTMENT PARTNERS
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Phoenix-Aberdeen Global Small Cap Fund
Investment Risk and Return Summary......................................... 1
Fund Expenses.............................................................. 5
Phoenix-Aberdeen New Asia Fund
Investment Risk and Return Summary......................................... 7
Fund Expenses.............................................................. 10
Additional Investment Techniques............................................. 12
Management of the Funds...................................................... 14
Pricing of Fund Shares....................................................... 16
Sales Charges................................................................ 17
Your Account................................................................. 19
How to Buy Shares............................................................ 20
How to Sell Shares........................................................... 20
Things You Should Know When Selling Shares................................... 21
Account Policies............................................................. 22
Investor Services............................................................ 23
Tax Status of Distributions.................................................. 24
Financial Highlights......................................................... 25
Additional Information....................................................... 28
[triangle] PHOENIX-
ABERDEEN
SERIES
FUND
<PAGE>
PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Phoenix-Aberdeen Global Small Cap Fund has an investment objective of
long-term capital appreciation. There is no guarantee that the fund will meet
its objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] Under normal circumstances, the fund intends to invest at least 65% of
its total assets in U.S. and foreign (non-U.S.) equity securities,
primarily common stocks, of small-size companies.
[arrow] Under normal circumstance, at least 65% of the fund's net assets will be
invested in three different countries at any one time.
[arrow] The fund's adviser is responsible for managing the fund's investment
program and the general operations of the fund. The adviser uses a top
down, bottom up approach that seeks growth at a reasonable price. The
adviser selects the amount of assets to allocate to countries and
geographic regions for investment based on the following factors:
[bullet] prospects for relative economic growth among U.S. and foreign
countries;
[bullet] expected levels of inflation;
[bullet] governmental policies influencing business decisions;
[bullet] relative price levels of the various capital markets;
[bullet] the outlook for currency relationships; and
[bullet] the range of individual investment opportunities available.
[arrow] Within the designated country allocations, the adviser will use primary
research to select individual securities based upon factors such as:
industry growth, management strength and treatment of minority
shareholders, financial soundness, market share, company valuation and
earnings strength. The small-cap companies selected will generally have
capitalizations of $750 million at the time of acquisition.
[arrow] The adviser may allocate assets for investment in U.S. equity securities
to Phoenix Investment Counsel, Inc., a subadviser to the fund. The
subadviser uses a value oriented approach, focusing on those companies
with low price per earnings, low debt and above-average yield.
Phoenix-Aberdeen Global Small Cap Fund 1
<PAGE>
Temporary Investment Strategy: During adverse economic or market conditions, any
part of the fund's assets may be held in cash or money market instruments,
including but not limited to, U.S. government obligations maturing within one
year from the date of purchase. When this happens, the fund may not achieve its
investment objective.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that support your share value can decrease
as well as increase. If between the time that you purchase shares and the time
you sell shares the value of the fund's investments decreases, you will lose
money. Investment values can decrease for a number of reasons including changes
in the overall economy and changes in specific countries or companies in which
the fund invests. As a result, the value of your shares may decrease as well.
FOREIGN INVESTING
Investing in securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S. companies such
as:
[bullet] less publicly available information about foreign countries;
[bullet] political and economic instability within countries;
[bullet] differences in financial reporting standards and transaction
settlement systems;
[bullet] the possibility of expropriation or confiscatory taxation; and
[bullet] changes in investment or exchange regulations.
Some investments may be made in currencies other than U.S. dollars that will
fluctuate in value as a result of changes in the currency exchange rates.
Exchange rate fluctuations can cause the value of your shares to decrease or
increase. Generally, when the value of the U.S. dollar increases against the
foreign currency in which an investment is denominated, the security tends to
decrease in value which, in turn, may cause the value of your shares to
decrease.
SMALL CAPITALIZATION COMPANIES
Given the limited operating history and rapidly changing fundamental prospects,
investment returns from smaller capitalization companies can be highly volatile.
Small capitalization companies may be affected to a greater extent by changes in
economic conditions and conditions in particular industries, are subject to
varying patterns of trading volume and may, at
2 Phoenix-Aberdeen Global Small Cap Fund
<PAGE>
times, be more difficult to sell. Focusing fund investments in small companies
may also subject the fund to greater risks than a fund that invests in a broad
range of securities that do not have the potential to appreciate and companies
with small capitalizations may find it more difficult to raise capital.
IMPACT OF THE YEAR 2000 ISSUE ON FUND INVESTMENTS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of an entity's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If an entity whose securities are held by the fund does not "fix" its Year
2000 issue, it is possible that its operations and financial results would be
hurt. Also, the cost of modifying computer programs to become Year 2000
compliant may hurt the financial performance and market price of entities whose
securities are held by the fund.
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Aberdeen Global Small Cap Fund. The bar chart shows changes in
the fund's Class A Shares performance from year to year.(1) The table shows how
the fund's average annual returns for one year and for the life of the fund
compare to those of a broad-based securities market index. The fund's past
performance is not necessarily an indication of how the fund will perform in the
future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
1997 -2.65
1998 1.38
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 15.44% (quarter ending December 31,
1998) and the lowest return for a quarter was (21.78)% (quarter ending September
30, 1998). Year-to-date performance (through September 30, 1999) is 15.11%.
Phoenix-Aberdeen Global Small Cap Fund 3
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns
(for the periods ending 12/31/98)(1) One Year Life of the Fund(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Shares -3.43% -0.36%
- ----------------------------------------------------------------------------------------------------------------
Class B Shares -2.97% -0.08%
- ----------------------------------------------------------------------------------------------------------------
FT/S&P - Actuaries World Index
Medium/Small Component(3) 12.61% 10.11%(4)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Since September 4, 1996.
(3) The FT/S&P - Actuaries World Index Medium/Small Component is an unmanaged,
broad-based measure of global small stock market total return performance. The
index's performance does not reflect sales charges.
(4) Index performance since September 30, 1996.
4 Phoenix-Aberdeen Global Small Cap Fund
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------ ------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5% (b)
Maximum Sales Charge (load) Imposed on Reinvested None
Dividends None
Redemption Fee None None
Exchange Fee None None
----------------------------------------------------
CLASS A CLASS B
SHARES SHARES
------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.85% 0.85%
Distribution and Service (12b-1) Fees (c) 0.25% 1.00%
Other Expenses 1.26% 1.26%
---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES (a) 2.36% 3.11%
==== ====
</TABLE>
- ----------
(a) The fund's investment adviser has agreed to reimburse through December 31,
2000, other operating expenses to the extent that such expenses exceed 1.00%
for each Class of Shares. Actual Total Annual Operating Expenses for the Fund,
after expense reimbursement, were 2.10% for Class A Shares and 2.85% for Class
B Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Phoenix-Aberdeen Global Small Cap Fund 5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $703 $1,176 $1,676 $3,043
- -----------------------------------------------------------------------------------------------------------------
Class B $714 $1,160 $1,630 $3,247
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B $314 $ 960 $1,630 $3,247
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses would be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Funds" for information about expense
reimbursement.
6 Phoenix-Aberdeen Global Small Cap Fund
<PAGE>
PHOENIX-ABERDEEN NEW ASIA FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Phoenix-Aberdeen New Asia Fund has an investment objective of long-term
capital appreciation. There is no guarantee that the fund will meet its
objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] Under normal circumstances, the fund intends to invest at least 65% of
its total assets in equity securities, primarily common stocks, of
issuers located in at least three different countries throughout Asia,
other than Japan.
[arrow] The fund's adviser uses a top down, bottom up approach that seeks
growth at a reasonable price.
[arrow] Primarily, investments will be in countries that have more established
markets in regions of Asian countries. The adviser's process begins by
selecting the amount of assets to allocate to countries and geographic
regions for investment based on the following factors:
[bullet] prospects for relative economic growth among Asian countries;
[bullet] expected levels of inflation;
[bullet] governmental policies influencing business decisions;
[bullet] relative price levels of the various capital markets;
[bullet] the outlook for currency relationships; and
[bullet] the range of individual investment opportunities available.
[arrow] Within the designated country allocations, the adviser will use primary
research to select individual securities based upon factors such as:
industry growth, management strength and treatment of minority
shareholders, financial soundness, market share, company valuation and
earnings strength.
Temporary Investment Strategy: Under abnormal market or economic conditions, the
fund may invest up to 100% of its assets in domestic (U.S.) and foreign (non
U.S.) short-term money market instruments, including but not limited to,
government obligations, certificates of deposit, commercial paper, short-term
corporate debt securities and repurchase agreements. When this happens, the fund
may not achieve its investment objective.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
Phoenix-Aberdeen New Asia Fund 7
<PAGE>
GENERAL
The value of the fund's investments that support your share value can decrease
as well as increase. If between the time that you purchase shares and the time
you sell shares the value of the fund's investments decreases, you will lose
money. Investment values can decrease for a number of reasons including changes
in the overall economy and changes in specific countries or companies in which
the fund invests. As a result, the value of your shares may decrease as well.
FOREIGN INVESTING
Investing in securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S. companies such
as:
[bullet] less publicly available information about foreign countries;
[bullet] political and economic instability within countries;
[bullet] differences in financial reporting standards and transaction
settlement systems;
[bullet] the possibility of expropriation or confiscatory taxation; and
[bullet] changes in investment or exchange regulations.
Some investments may be made in currencies other than U.S. dollars that will
fluctuate in value as a result of changes in the currency exchange rates.
Exchange rate fluctuations can cause the value of your shares to decrease or
increase. Generally, when the value of the U.S. dollar increases against the
foreign currency in which an investment is denominated, the security tends to
decrease in value which, in turn, may cause the value of your shares to
decrease.
ASIAN SECURITIES
In addition to the general risks of foreign investment, Asian markets may
present a number of higher than normal risk factors. China in particular, as
well as certain other Asian countries, may be subject to a greater degree of
economic, political and social instability as compared to the United States.
Generally, Asian securities exhibit greater price volatility, are less liquid
and have smaller market capitalizations. Asian countries suffer from currency
devaluation and higher rates of inflation. There is also substantial government
intervention in the economies of Asian countries; however, there is less
government supervision and regulation of the securities markets and the
participants in those markets. Foreign investment in certain Asian securities
markets is restricted or controlled to varying degrees. These restrictions and
controls may preclude investment in certain securities and limit repatriation of
income and invested capital. In addition, transaction costs will generally be
higher in Asian countries than in the U.S.
IMPACT OF THE YEAR 2000 ISSUE ON FUND INVESTMENTS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of an entity's computer programs that have date-sensitive
software may recognize a date using "00" as the
8 Phoenix-Aberdeen New Asia Fund
<PAGE>
year 1900 rather than the year 2000. If an entity whose securities are held by
the fund does not "fix" its Year 2000, issue it is possible that its operations
and financial results would be hurt. Also, the cost of modifying computer
programs to become Year 2000 compliant may hurt the financial performance and
market price of entities whose securities are held by the fund.
PERFORMANCE TABLES
The bar chart and table provide some indication of the risks of investing in the
Phoenix-Aberdeen New Asia Fund. The bar chart shows changes in the fund's Class
A Shares performance from year to year.(1) The table shows how the fund's
average annual returns for one year and for the life of the fund compare to
those of a broad-based securities market index. The fund's past performance is
not necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
1997 -32.91
1998 -2.05
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 26.02% (quarter ending December 31,
1998) and the lowest return for a quarter was (25.07)% (quarter ending December
31, 1997). Year-to-date performance (through September 30, 1999) is 25.24%.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns
(for the periods ending 12/31/98)(1) One Year Life of the Fund(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Shares -6.70% -17.98%
- ----------------------------------------------------------------------------------------------------------------
Class B Shares -6.32% -17.84%
- ----------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital International All
Country Asia Pacific (except Japan) Index(3) -5.21% -15.96%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Since September 4, 1996.
(3) Morgan Stanley Capital International All Country Asia Pacific (except Japan)
Index is an unmanaged, commonly used measure of stock performance in Asia and
the Pacific Basin. Performance is calculated on a total return basis, as
reported by Frank Russell Company.
Phoenix-Aberdeen New Asia Fund 9
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
------ ------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<S> <C> <C>
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None 5% (b)
Maximum Sales Charge (load) Imposed on Reinvested
Dividends None None
Redemption Fee None None
Exchange Fee None None
----------------------------------------------------
CLASS A CLASS B
SHARES SHARES
------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.85% 0.85%
Distribution and Service (12b-1) Fees (c) 0.25% 1.00%
Other Expenses 2.10% 2.10%
---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES (a) 3.20% 3.95%
==== ====
</TABLE>
(a) The fund's investment adviser has agreed to reimburse through December 31,
2000, other operating expenses to the extent that such expenses exceed 1.00%
for each Class of Shares. Actual Total Annual Operating Expenses for the Fund,
after expense reimbursement, were 2.10% for Class A Shares and 2.85% for Class B
Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
10 Phoenix-Aberdeen New Asia Fund
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $783 $1,414 $2,069 $3,812
- -----------------------------------------------------------------------------------------------------------------
Class B $797 $1,404 $2,028 $4,004
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
Class B $397 $1,204 $2,028 $4,004
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses would be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Funds" for information about expense
reimbursement.
Phoenix-Aberdeen New Asia Fund 11
<PAGE>
ADDITIONAL INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
In addition to the Principal Investment Strategies and Risks, Phoenix-Aberdeen
New Asia Fund and Phoenix-Aberdeen Global Small Cap Fund each may engage in the
following investment techniques:
OTHER EQUITY SECURITIES
The funds may invest in preferred stocks, warrants and securities convertible
into common stocks. Preferred stocks may not fully participate in dividends and
convertible securities may have higher yields than common stocks but lower
yields than comparable nonconvertible securities.
EMERGING MARKET INVESTING
The funds may invest in countries with markets that are not fully developed, so
called "emerging market countries." Risks associated with foreign investments
may be intensified in emerging market countries, and such countries and
companies doing business in such countries may not have the same range of
opportunities and may have more obstacles to financial success than their
counterparts in developed nations.
MUTUAL FUND INVESTING
The funds may invest in other mutual funds in order to take advantage of
investment opportunities in certain countries where the funds otherwise would
not have been able to invest. The assets invested in other mutual funds incur a
layering of expenses including operating costs, advisory fees and administrative
fees that you, as a shareholder in the funds, indirectly bear.
DEPOSITORY RECEIPTS
The funds may invest in American Depository Receipts (ADRs) and European
Depository Receipts (EDRs). While investment in ADRs may eliminate some of the
risk associated with foreign investments, it does not eliminate all the risks
inherent in investing in securities of foreign issuers. ADRs, which are not
sponsored by U.S. banks, and EDRs are subject to the same investment risks as
foreign securities.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Each of the funds may invest up to 15% of its total assets in forward foreign
currency exchange contracts. Such contracts may limit potential exchange rate
gains, may incur higher transaction costs and may not protect the fund against
future currency exchange fluctuations as anticipated by the investment adviser.
12 Phoenix-Aberdeen Series Fund
<PAGE>
REPURCHASE AGREEMENTS
The funds may invest in repurchase agreements with commercial banks, brokers and
dealers considered by the adviser to be creditworthy. Default or insolvency of
the other party presents a risk to the fund.
SECURITIES LENDING
Each of the funds may lend up to 25% of its total assets at market value to
increase its investment returns. If the borrower is unwilling or unable to
return the borrowed securities when due, the fund can suffer losses.
FINANCIAL FUTURES AND RELATED OPTIONS
The funds may use financial futures contracts and related options for hedging
purposes. Futures and options involve market risk in excess of their value and
may not be as liquid as other securities.
ILLIQUID SECURITIES
Each of the funds may invest up to 15% of its net assets in illiquid securities.
The inability of the funds to dispose of such securities in a timely manner and
at a fair price at a time when it might be necessary or advantageous to do so
may harm the funds.
CONVERTIBLE SECURITIES
Each of the funds may invest in convertible securities. Convertible securities
have several unique investment characteristics, such as:
[bullet] higher yields than common stocks but lower yields than
comparable nonconvertible securities;
[bullet] typically less fluctuation in value than the "underlying"
common stock, that is, the common stock that the investor
receives if he converts; and
[bullet] the potential for capital appreciation if the market price of
the underlying common stock increases.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
Phoenix-Aberdeen Series Fund 13
<PAGE>
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
THE ADVISERS
Phoenix-Aberdeen Investment Advisors, LLC ("PAIA") is the investment adviser to
the funds and is located at One American Row, Hartford, Connecticut. PAIA is
jointly owned and managed by PM Holdings, Inc., a direct subsidiary of Phoenix
Home Life Mutual Insurance Company and Aberdeen Fund Managers, Inc. As of
September 30, 1999, PAIA had assets under management of $49.7 million.
Phoenix Investment Counsel, Inc. ("Phoenix"), the domestic subadviser to the
funds, is located at 56 Prospect Street, Hartford, Connecticut and has acted as
an investment adviser for over sixty years. Phoenix acts as the investment
adviser for 14 mutual funds, as subadviser to three mutual funds and as adviser
to institutional clients. As of September 30, 1999, Phoenix had $23.4 billion
in assets under management.
Aberdeen Fund Managers, Inc. ("Aberdeen"), the foreign subadviser to the funds,
is located at One Financial Plaza, Suite 2210, 100 S.E. Third Avenue, Fort
Lauderdale, FL 33394. Aberdeen is a wholly-owned subsidiary of Aberdeen Asset
Management PLC based in Aberdeen, Scotland. Together with its subsidiaries,
Aberdeen Asset Management PLC provides investment management services to unit
and investment trusts, segregated pension funds and other institutional and
private portfolios, and through Aberdeen, U.S. mutual funds. Aberdeen has served
as subadviser for Phoenix-Aberdeen New Asia Fund, Phoenix-Aberdeen Global Small
Cap Fund and the Aberdeen New Asia Series of The Phoenix Edge Series Fund since
their inception in 1996. Aberdeen has also served as subadviser to
Phoenix-Aberdeen Worldwide Opportunities Fund, Phoenix-Aberdeen International
Fund of Phoenix Multi-Portfolio Fund and the International Series of The Phoenix
Edge Series Fund since 1998. As of September 30, 1999, Aberdeen Asset Management
PLC had $26.2 billion in assets under management.
Subject to the direction of the funds' Board of Trustees, the adviser is
responsible for managing the fund's investment program and the general
operations of the funds. As compensation for its services to each fund, the
adviser is entitled to a fee, payable monthly, at an annual rate of 0.85% of the
average daily net assets of each fund. The adviser delegates certain investment
decisions and functions to the subadvisers.
For providing cash management and other services to each fund as needed, PAIA
pays a monthly fee to Phoenix equivalent to 0.15% of the average aggregate daily
net asset value of each fund. For providing advisory services with respect to
the funds' assets allocated from time to time by the adviser, PAIA pays a fee to
Phoenix equivalent to 0.40% of the average daily net asset value of the assets
of each fund so allocated.
14 Phoenix-Aberdeen Series Fund
<PAGE>
For implementing certain portfolio transactions and providing research and other
services to each fund, PAIA also pays a monthly subadvisory fee to Aberdeen
equivalent to 0.40% of the average aggregate daily net asset value of the New
Asia Fund, and 0.40% of the average daily net asset value of such assets of the
Global Small Cap Fund allocated to it by the adviser for management.
The funds' investment adviser has agreed to reimburse through December 31,
2000 other operating expenses of each fund to the extent that such expenses
exceed 1.00% for each class of shares of each fund.
During the funds' last fiscal year, the funds paid total management fees of
$286,679.
PORTFOLIO MANAGEMENT
The Global Small Cap Fund is managed by an investment committee which is
primarily responsible for the day-to-day management of the portfolio.
Hugh Young is the portfolio manager of the New Asia Fund and as such is
primarily responsible for the day-to-day management of the portfolio. Mr. Young
has been employed as an investment director for Aberdeen Asset Management Asia
Ltd. since 1988. He is also Senior Vice President and Portfolio Manager for the
Phoenix-Aberdeen New Asia Series of The Phoenix Edge Series Fund.
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Trustees have directed management to ensure that the systems used by service
providers (PAIA and its affiliates) in support of the funds' operations be
assessed and brought into Year 2000 compliance. Based upon its assessments, PAIA
determined that it would be required to modify or replace portions of its
software so that its computer systems would properly utilize dates beyond
December 31, 1999. PAIA management believes that the majority of these systems
are already Year 2000 compliant. PAIA believes that with modifications to
existing software and conversions to new software, the Year 2000 issue will be
mitigated. However, if the problem is not fully addressed, the funds may be
negatively impacted.
PAIA is utilizing both internal and external resources to reprogram, or replace,
and test the software for Year 2000 modifications. As of June 30, 1999, PAIA
mission-critical systems have been upgraded and tested for Year 2000 compliance.
The total cost to become Year 2000 compliant is not an expense of the funds and
is not expected to have a material impact on the operating results of PAIA.
Phoenix-Aberdeen Series Fund 15
<PAGE>
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
Each fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, the fund calculates net asset value by:
[bullet] adding the values of all securities and other assets of the
fund,
[bullet] subtracting liabilities, and
[bullet] dividing by the total number of outstanding shares of the fund.
Asset Value: The funds' investments are valued at market value. If market
quotations are not available, a fund determines a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
of such securities. Foreign and domestic equity securities are valued at the
last sale price or, if there has been no sale that day, at the last bid price,
generally. Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and
liabilities that are not class specific (such as management fees) are allocated
to each class in proportion to each class' net assets, except where an
alternative allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class' net asset value per
share.
The net asset value per share of each class of each fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). A fund will not calculate
its net asset values per share on days when the NYSE is closed for trading.
Since the funds hold securities that are traded on foreign exchanges that trade
on weekends or other holidays when the funds do not price their shares, the net
asset value of the funds' shares may change on days when shareholders will not
be able to purchase or redeem the funds' shares.
16 Phoenix-Aberdeen Series Fund
<PAGE>
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the funds' authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in full and fractional shares that
are purchased at the closing net asset value on the next business day on which
the fund's net asset value is calculated following the dividend record date.
SALES CHARGES
- --------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
Each fund presently offers two classes of shares. Each class of shares has
different sales and distribution charges (see "Fund Expenses" previously in this
prospectus). The funds have adopted distribution and service plans allowed under
Rule 12b-1 of the Investment Company Act of 1940 that authorize the funds to pay
distribution and service fees for the sale of their shares and for services
provided to shareholders.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of a fund's assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
CLASS A SHARES. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 4.75% of the offering price (4.99% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the fund when redeemed. Class A
Shares have lower distribution and service fees (0.25%) and pay higher dividends
than any other class.
CLASS B SHARES. If you purchase Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 5
years after they are purchased, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B and Class C
Shares" below. This charge declines to 0% over a period of 5 years and may be
waived under certain conditions. Class B shares have higher distribution and
service fees (1.00%) and pay lower dividends than Class A Shares. Class B Shares
Phoenix-Aberdeen Series Fund 17
<PAGE>
automatically convert to Class A Shares eight years after purchase. Purchase of
Class B Shares may be inappropriate for any investor who may qualify for reduced
sales charges of Class A Shares and anyone who is over 85 years of age. The
underwriter may decline purchases in such situations.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the fund's underwriter (Phoenix Equity Planning Corporation or "PEPCO").
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
SALES CHARGE AS
A PERCENTAGE OF
-------------------------------------------------
AMOUNT OF NET
TRANSACTION OFFERING AMOUNT
AT OFFERING PRICE PRICE INVESTED
- --------------------------------------------------------------------------------
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B
Class B Shares are purchased without an initial sales charge; however, shares
sold within a specified time period are subject to a declining contingent
deferred sales charge ("CDSC") at the rates listed below. The sales charge will
be multiplied by the then current market value or the initial cost of the shares
being redeemed, whichever is less. No sales charge will be imposed on increases
in net asset value or on shares purchased through the reinvestment of income
dividends or capital gains distributions. To minimize the sales charge, shares
not subject to any charge will be redeemed first, followed by shares held the
longest time. To calculate the amount of shares owned and time period held, all
Class B Shares purchased in any month are considered purchased on the last day
of the preceding month.
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
YEAR 1 2 3 4 5 6+
- --------------------------------------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
18 Phoenix-Aberdeen Series Fund
<PAGE>
YOUR ACCOUNT
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT
Your financial advisor can assist you with your initial purchase as well as all
phases of your investment program. If you are opening an account by yourself,
please follow the instructions outlined below.
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
[bullet] $25 for individual retirement accounts, or accounts that use
the systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
[bullet] There is no initial dollar requirement for defined contribution
plans, profit-sharing plans, or employee benefit plans. There
is also no minimum for reinvesting dividends and capital gains
into another account.
[bullet] $500 for all other accounts.
Minimum ADDITIONAL investments:
[bullet] $25 for any account.
[bullet] There is no minimum for defined contribution plans,
profit-sharing plans, or employee benefit plans. There is also
no minimum for reinvesting dividends and capital gains into an
existing account.
STEP 2.
Your second choice will be what class of shares to buy. Each fund offers two
classes of shares for individual investors. Each has different sales and
distribution charges. Because all future investments in your account will be
made in the share class you choose when you open your account, you should make
your decision carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
STEP 3.
Your next choice will be how you want to receive any dividends and capital gain
distributions. Your options are:
[bullet] Receive both dividends and capital gain distributions in
additional shares;
[bullet] Receive dividends in additional shares and capital gain
distributions in cash;
Phoenix-Aberdeen Series Fund 19
<PAGE>
[bullet] Receive dividends in cash and capital gain distributions in
additional shares; or
[bullet] Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
<TABLE>
<CAPTION>
HOW TO BUY SHARES
- -----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
TO OPEN AN ACCOUNT
----------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
----------------------------------------------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable to the
fund. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
----------------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
----------------------------------------------------------------------------------------------------------------
Through express delivery Complete a New Account Application and send it with a check payable to the
fund. Send them to: Boston Financial Data Services, Attn: Phoenix Funds,
66 Brooks Drive, Braintree, MA 02184.
----------------------------------------------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
----------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the funds buy back shares at the net asset value next
determined after receipt of a redemption order by the funds' Transfer Agent or
an authorized agent. In the case of a Class B Share redemption, you will be
subject to the applicable deferred sales charge, if any, for such shares.
Subject to certain restrictions, shares may be redeemed by telephone or in
writing. In addition, shares may be sold through securities dealers, brokers or
agents who may charge customary commissions or fees for their services. The
funds do not charge any redemption fees. Payment for shares redeemed is made
within seven days; however, redemption proceeds will not be disbursed until each
check used for purchases of shares has been cleared for payment by your bank,
which may take up to 15 days after receipt of the check.
20 Phoenix-Aberdeen Series Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TO SELL SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ------------------------------------------------------------------------------------------------------------------
Through the mail Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301. Be sure to include the registered owner's name, fund and account
number, number of shares or dollar value you wish to sell.
- ------------------------------------------------------------------------------------------------------------------
Through express delivery Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account number.
- ------------------------------------------------------------------------------------------------------------------
By telephone For sales up to $50,000, requests can be made by calling (800)243-1574.
- ------------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
- --------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the funds. Each fund reserves the right to pay large
redemptions "in-kind" (in securities owned by the fund rather than in cash).
Large redemptions are those over $250,000 or 1% of the fund's net assets.
Additional documentation will be required for redemptions by organizations,
fiduciaries, or retirement plans, or if redemption is requested by anyone but
the shareholder(s) of record. Transfers between broker-dealer "street" accounts
are governed by the accepting broker-dealer. Questions regarding this type of
transfer should be directed to your financial advisor. Redemption requests will
not be honored until all required documents in proper form have been received.
To avoid delay in redemption or transfer, shareholders having questions about
specific requirements should contact the funds' Transfer Agent at (800)243-1574.
REDEMPTIONS BY MAIL
[arrow] If you are selling shares held individually, jointly, or as custodian
under the Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act.
Send a clear letter of instructions if all of these apply:
[bullet] The proceeds do not exceed $50,000.
[bullet] The proceeds are payable to the registered owner at the address
on record.
Phoenix-Aberdeen Series Fund 21
<PAGE>
Send a clear letter of instructions with a signature guarantee when any
of these apply:
[bullet] You are selling more than $50,000 worth of shares.
[bullet] The name or address on the account has changed within the last
60 days.
[bullet] You want the proceeds to go to a different name or address than
on the account.
[arrow] If you are selling shares held in a corporate or fiduciary account,
please contact the fund's Transfer Agent at (800)243-1574.
If required, the signature guarantee on your request must be made by an eligible
guarantor institution as defined by the funds' Transfer Agent in accordance with
its signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third-party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
ACCOUNT POLICIES
- --------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A or Class B Shares, you can purchase
Class A Shares of any fund at net asset value, with no sales charge, by
reinvesting all or part of your proceeds, but not more. Send your written
request to State Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call
us at (800)243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B shareholders who have had the
contingent deferred sales charge waived because they are in the Systematic
Withdrawal Program are not eligible for this reinstatement privilege.
22 Phoenix-Aberdeen Series Fund
<PAGE>
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
EXCHANGE PRIVILEGES
You should read the prospectus carefully before deciding to make an exchange.
You can obtain a prospectus from your financial advisor or by calling us at
(800)243-4361 or accessing our Web site at www.phoenixinvestments.com.
[bullet] You may exchange shares for another fund in the same class of
shares; e.g., Class A for Class A.
[bullet] Exchanges may be made by phone ((800)243-1574) or by mail
(State Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
[bullet] The amount of the exchange must be equal to or greater than the
minimum initial investment required.
[bullet] The exchange of shares is treated as a sale and a purchase for
federal income tax purposes.
[bullet] Because excessive trading can hurt fund performance and harm
other shareholders, the funds reserve the right to temporarily
or permanently end exchange privileges or reject an order from
anyone who appears to be attempting to time the market,
including investors who request more than one exchange in any
30-day period. The funds' underwriter has entered into
agreements with certain timing firms permitting them to
exchange by telephone. These privileges are limited, and the
funds' distributor has the right to reject or suspend them.
RETIREMENT PLANS
Shares of the funds may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SIMPLE IRA, Roth IRA,
401(k) plans, profit-sharing, money purchase plans, and 403(b) plans. For more
information, call (800)243-4361.
INVESTOR SERVICES
- --------------------------------------------------------------------------------
INVESTO-MATIC is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your
Phoenix-Aberdeen Series Fund 23
<PAGE>
mutual fund account. Just complete the Investo-Matic Section on the application
and include a voided check.
SYSTEMATIC EXCHANGE allows you to automatically move money from one Phoenix Fund
to another on a monthly, quarterly, semiannual or annual basis. Shares of one
Phoenix Fund will be exchanged for shares of the same class of another fund at
the interval you select. To sign up, just complete the Systematic Exchange
Section on the application.
TELEPHONE EXCHANGE lets you exchange shares of one fund for the same class of
shares in another fund, using our customer service telephone service. See the
Telephone Exchange Section on the application.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000.
TAX STATUS OF DISTRIBUTIONS
- --------------------------------------------------------------------------------
The funds plan to make distributions from net investment income at intervals
stated on the table below and to distribute net realized capital gains, if any,
at least annually.
- -------------------------------------------------------------------------------
FUND DIVIDEND PAID
- -------------------------------------------------------------------------------
Global Small Cap Fund Semiannually
- -------------------------------------------------------------------------------
New Asia Fund Semiannually
- -------------------------------------------------------------------------------
Distributions of short-term capital gains and net investment income are taxable
to shareholders as ordinary income. Long-term capital gains, if any, distributed
to shareholders and which are designated by a fund as capital gains
distributions, are taxable to shareholders as long-term capital gain
distributions regardless of the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and capital gain
distributions are paid in additional shares. All distributions, cash or
additional shares, are subject to federal income tax and may be subject to
state, local and other taxes.
24 Phoenix-Aberdeen Series Fund
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These tables are intended to help you understand the funds' financial
performance for the life of the funds. Certain information reflects financial
results for a single fund share. The total returns in the table represent the
rate that an investor would have earned or lost on an investment in the funds
(assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, independent accountants. Their
report, together with the funds' financial statements, are included in the
funds' most recent Annual Report, which is available upon request.
PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
FROM INCEPTION
YEAR ENDED JULY 31, 9/4/96 TO
1999 1998 7/31/97
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $10.11 $11.08 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.04)(4)(5) (0.07)(4)(5) (0.03)(4)(5)
Net realized and unrealized gain (loss) 0.52 0.14 1.11
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.48 0.07 1.08
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains (0.27) (0.89) --
In excess of net realized gains (0.36) -- --
In excess of net investment income -- (0.15) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.63) (1.04) --
------ ------ ------
Change in net asset value (0.15) (0.97) 1.08
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.96 $10.11 $11.08
====== ====== ======
Total return(1) 5.99% 1.86% 10.80%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $14,626 $17,781 $23,874
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.10% 2.10% 2.10%(2)
Net investment income (loss) (0.50)% (0.65)% (0.32)%(2)
Portfolio turnover 81% 212% 162%(3)
</TABLE>
- ----------------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment advisor of $0.02,
$0.03 and $0.05, respectively.
Phoenix-Aberdeen Series Fund 25
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------
FROM INCEPTION
YEAR ENDED JULY 31, 9/4/96 TO
1999 1998 7/31/97
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $10.00 $11.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.11)(4)(5) (0.14)(4)(5) (0.10)(4)(5)
Net realized and unrealized gain (loss) 0.51 0.14 1.10
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.40 -- 1.00
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains (0.27) (0.89) --
In excess of net realized gains (0.36) -- --
In excess of net investment income -- (0.11) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.63) (1.00) --
------ ------ ------
Change in net asset value (0.23) (1.00) 1.00
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.77 $10.00 $11.00
====== ====== ======
Total return(1) 5.22% 1.12% 10.00%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $8,673 $12,123 $17,658
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.85% 2.85% 2.85%(2)
Net investment income (loss) (1.26)% (1.40)% (1.07)%(2)
Portfolio turnover 81% 212% 162%(3)
</TABLE>
PHOENIX-ABERDEEN NEW ASIA SERIES
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
FROM INCEPTION
YEAR ENDED JULY 31, 9/4/96 TO
1999 1998 7/31/97
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 5.45 $10.44 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.07(4)(6) 0.06(4)(6) 0.09(4)(6)(7)
Net realized and unrealized gain (loss) 2.78 (4.75) 0.41
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.85 (4.69) 0.50
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.01) (0.10) (0.06)
In excess of net investment income (0.06) (0.20) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.07) (0.30) (0.06)
------ ------ ------
Change in net asset value 2.78 (4.99) 0.44
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 8.23 $ 5.45 $10.44
====== ====== ======
Total return(1) 52.94% (45.29)% 4.98%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $9,068 $6,352 $13,355
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.10% 2.10% 2.10%(2)
Net investment income 1.03% 0.89% 0.95%(2)
Portfolio turnover 38% 44% 9%(3)
</TABLE>
- ----------------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment advisor of $0.02,
$0.03 and $0.05, respectively.
(6) Includes reimbursement of operating expenses by investment advisor of $0.07,
$0.10 and $0.15, respectively.
(7) 1997 distributions were made in accordance with the prospectus; however,
class level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
26 Phoenix-Aberdeen Series Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ABERDEEN NEW ASIA SERIES
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------
FROM INCEPTION
YEAR ENDED JULY 31, 9/4/96 TO
1999 1998 7/31/97
---- ---- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 5.40 $10.39 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.02(4)(5) 0.01(4)(5) 0.01(4)(5)(6)
Net realized and unrealized gain (loss) 2.75 (4.73) 0.43
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 2.77 (4.72) 0.44
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.09) (0.05)
In excess of net investment income (0.04) (0.18) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.04) (0.27) (0.05)
------ ------ ------
Change in net asset value 2.73 (4.99) 0.39
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 8.13 $ 5.40 $10.39
====== ====== ======
Total return(1) 51.68% (45.83)% 4.37%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $3,481 $2,756 $6,416
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.85% 2.85% 2.85%(2)
Net investment income 0.03% 0.18% 0.06%(2)
Portfolio turnover 38% 44% 9%(3)
</TABLE>
- ----------------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment advisor of $0.07,
$0.10 and $0.15, respectively.
(6) 1997 distributions were made in accordance with the prospectus; however,
class level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
Phoenix-Aberdeen Series Fund 27
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The funds have filed a Statement of Additional Information about the funds,
dated November 26, 1999, with the Securities and Exchange Commission. The
Statement contains more detailed information about the funds. It is incorporated
into this prospectus by reference and is legally part of the prospectus. You may
obtain a free copy of the Statement:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
You may also obtain information about the funds from the Securities and Exchange
Commission:
[arrow] through its internet site (http://www.sec.gov),
[arrow] by visiting its Public Reference Room in Washington, DC or
[arrow] by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330.
SHAREHOLDER REPORTS
The funds semiannually mail to shareholders detailed reports containing
information about the funds' investments. The funds' Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the funds' performance from August 1 through July 31. You
may request a free copy of the funds' Annual and Semiannual Reports:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
SEC File Nos. 333-5039 and 811-7643
28 Phoenix-Aberdeen Series Fund
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[LOGO] PHOENIX
INVESTMENT PARTNERS
PXP 147 (11/99)
<PAGE>
PHOENIX-ABERDEEN NEW ASIA FUND
PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND
101 Munson Street
Greenfield, MA 01301
STATEMENT OF ADDITIONAL INFORMATION
November 26, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of the
Phoenix-Aberdeen Series Fund (the "Trust"), dated November 26, 1999, and should
be read in conjunction with it. The Trust's Prospectus may be obtained by
calling Phoenix Equity Planning Corporation ("Equity Planning" or the
"Distributor") at (800) 243-4361 or by writing to Equity Planning at 100 Bright
Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
The Trust................................................................. 1
Investment Objectives and Policies........................................ 1
Investment Restrictions................................................... 5
Performance Information .................................................. 7
Portfolio Transactions and Brokerage...................................... 8
Services of the Advisers.................................................. 9
Services of the Administrator............................................. 10
Net Asset Value........................................................... 11
How to Buy Shares......................................................... 11
Alternative Purchase Arrangements......................................... 11
Investor Account Services................................................. 14
How to Redeem Shares...................................................... 15
Dividends, Distributions and Taxes........................................ 16
Tax Sheltered Retirement Plans............................................ 18
The Distributor........................................................... 18
Distribution Plans........................................................ 20
Management of the Trust .................................................. 21
Additional Information.................................................... 27
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY): (800) 243-1926
PXP 147B (11/99)
<PAGE>
THE TRUST
Phoenix-Aberdeen Series Fund (the "Trust") is an open-end management
investment company established as a business trust under the laws of the
Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated May
31, 1996 (the "Declaration of Trust"). The Declaration of Trust authorizes the
assets and shares of the Funds to be divided into two Funds (the "Funds"). Each
Fund has a different investment objective, invests primarily in certain types of
securities, and is designed to meet different investment needs. In many
respects, each Fund operates as if it were a separate mutual fund. The Funds'
Prospectus describes the investment objectives of each Fund. The following
discussion supplements the description of each Fund's investment policies and
investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Fund are described in the
"Investment Objectives" and "Principal Investment Strategies" sections of the
Prospectus. The following discussion supplements the "Investment Risks and
Return Summary" section of the Prospectus.
FINANCIAL FUTURES CONTRACTS AND RELATED OPTIONS
Each Fund may use financial futures contracts and related options to hedge
against changes in the market value of their portfolio securities or securities
which they intend to purchase. A Fund may use foreign currency futures contracts
to hedge against changes in the value of foreign currencies. See "Foreign
Currency Transactions" below. Hedging is accomplished when an investor takes a
position in the futures market opposite to the investor's cash market position.
There are two types of hedges -- long (or buying) and short (or selling) hedges.
Historically, prices in the futures market have tended to move in concert with
(although in inverse relation to) cash market prices, and prices in the futures
market have maintained a fairly predictable relationship to prices in the cash
market. Thus, a decline in the market value of securities or the value of
foreign currencies may be protected against to a considerable extent by gains
realized on futures contracts sales. Similarly, it is possible to protect
against an increase in the market price of securities which a Fund utilizing
this investment technique may wish to purchase in the future by purchasing
futures contracts.
Each Fund may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade and may purchase exchange- or
board-traded put and call options on financial futures contracts as a hedge
against anticipated changes in the market value of its portfolio securities or
securities which it intends to purchase. Financial futures contracts consist of
interest rate futures contracts, securities index futures contracts and foreign
currency futures contracts. A clearing corporation associated with the exchange
or board of trade on which a financial futures contract trades assumes
responsibility for the completion of transactions and also guarantees that open
futures contracts will be performed.
In contrast to the situation in which a Fund purchases or sells a security,
no security is delivered or received by a Fund upon the purchase or sale of a
financial futures contract (although an obligation to deliver or receive the
underlying security in the future is created by such a contract). Initially,
when it enters into a financial futures contract, a Fund utilizing this
investment technique will be required to deposit in a pledged account with the
Funds' custodian bank with respect to such Fund an amount of cash or U.S.
Treasury bills. This amount is known as initial margin and is in the nature of a
performance bond or good faith deposit on the contract. The current initial
margin deposit required per contract is approximately 5% of the contract amount.
Brokers may establish deposit requirements higher than this minimum, however,
subsequent payments, called variation margin, will be made to and from the
account on a daily basis as the price of the futures contract fluctuates. This
process is known as marking to market.
The writer of an option on a futures contract is required to deposit margin
pursuant to requirements similar to those applicable to futures contracts. Upon
exercise of an option on a futures contract, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's margin
account. This amount will be equal to the amount by which the market price of
the futures contract at the time of exercise exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.
Although financial futures contracts by their terms call for actual delivery
or acceptance of securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out is
accomplished by effecting an offsetting transaction. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of securities and the same delivery date. If the sale price exceeds the
offsetting purchase price, the seller immediately would be paid the difference
and would realize a gain. If the offsetting purchase price exceeds the sale
price, the seller immediately would pay the difference and would realize a loss.
Similarly, a futures contract purchase is closed out by effecting a futures
contract sale for the same securities and the same delivery date. If the
offsetting sale price exceeds the purchase price, the purchaser would realize a
gain, whereas if the purchase price exceeds the offsetting sale price, the
purchaser would realize a loss.
1
<PAGE>
Any Fund utilizing this investment technique will pay commissions on
financial futures contracts and related options transactions. These commissions
may be higher than those which would apply to purchases and sales of securities
directly, and will be in addition to those paid for direct purchases and sales
of securities.
LIMITATIONS ON FUTURES CONTRACTS AND RELATED OPTIONS. Any Fund utilizing this
investment technique may not engage in transactions in financial futures
contracts or related options for speculative purposes but only as a hedge
against anticipated changes in the market value of portfolio securities or
securities which it intends to purchase or foreign currencies. A Fund utilizing
this investment technique may not purchase or sell financial futures contracts
or related options if, immediately thereafter, the sum of the amount of initial
margin deposits on the Fund's existing futures and related options positions and
the premiums paid for related options would exceed 5% of the market value of the
Fund's total assets. At the time of purchase of a futures contract or a call
option on a futures contract, any asset, including equity securities and
non-investment grade debt so long as the asset is liquid, unencumbered and
marked to market daily equal to the market value of the futures contract minus
the Fund's initial margin deposit with respect thereto will be deposited in a
pledged account with the Fund's custodian bank with respect to such Fund to
collateralize fully the position and thereby ensure that it is not leveraged.
RISKS RELATING TO FUTURES CONTRACTS AND RELATED OPTIONS. Positions in futures
contracts and related options may be closed out on an exchange if the exchange
provides a secondary market for such contracts or options. A Fund utilizing this
investment technique will enter into a futures or futures related option
position only if there appears to be a liquid secondary market. However, there
can be no assurance that a liquid secondary market will exist for any particular
option or futures contract at any specific time. Thus, it may not be possible to
close out a futures or related option position. In the case of a futures
position, in the event of adverse price movements the Fund would continue to be
required to make daily margin payments. In this situation, if the Fund has
insufficient cash to meet daily margin requirements, it may have to sell
portfolio securities to meet its margin obligations at a time when it may be
disadvantageous to do so. In addition, the Fund may be required to take or make
delivery of the securities underlying the futures contracts it holds. The
inability to close out futures positions also could have an adverse impact on
the Fund's ability to hedge its positions effectively.
There are several risks in connection with the use of futures contracts as a
hedging device. While hedging can provide protection against an adverse movement
in market prices, it can also limit a hedger's opportunity to benefit fully from
favorable market movement. In addition, investing in futures contracts and
options on futures contracts will cause a Fund to incur additional brokerage
commissions and may cause an increase in a Fund's turnover rate.
The successful use of futures contracts and related options depends on the
ability of the Adviser to forecast correctly the direction and extent of market
movements, interest rates and other market factors within a given time frame. To
the extent market prices remain stable during the period a futures contract or
option is held by a Fund or such prices move in a direction opposite to that
anticipated, the Fund may realize a loss on the hedging transaction which is not
offset by an increase in the value of its portfolio securities. Options and
futures may also fail as a hedging technique in cases where the movements of the
securities underlying the options and futures do not follow the price movements
of the portfolio securities subject to the hedge. As a result, the Fund's total
return for the period may be less than if it had not engaged in the hedging
transaction.
Utilization of futures or options contracts by a Fund involves the risk of
imperfect correlation in movements in the price of futures contracts and
movements in the price of the securities or currencies which are being hedged.
If the price of the futures contract moves more or less than the price of the
securities or currency being hedged, the Fund will experience a gain or loss
which will not be completely offset by movements in the price of the securities
or currency. It is possible that, where a Fund has sold futures contracts to
hedge against decline in the market, the market may advance and the value of
securities held in the Fund or the currencies in which its foreign securities
are denominated may decline. If this occurred, the Fund would lose a potentially
unlimited amount of money on the futures contract and would also experience a
decline in value in its portfolio securities. Where futures are purchased to
hedge against a possible increase in the prices of securities or foreign
currencies before the Fund is able to invest its cash (or cash equivalents) in
securities (or options) in an orderly fashion, it is possible that the market
may decline; if the Fund then determines not to invest in securities (or
options) at that time because of concern as to possible further market decline
or for other reasons, the Fund will realize a loss on the futures that would not
be offset by a reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in the
futures market elect to close out their contracts through offsetting
transactions rather than to meet margin deposit requirements. In such cases,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities or
currencies rather than to engage in closing transactions because such action
would reduce the liquidity of the futures market. In addition, because, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the underlying securities market,
increased participation by speculators in the futures market could cause
temporary price distortions. Because of the possibility of price distortions in
the futures market and of the imperfect correlation between movements in the
prices of securities or foreign currencies and movements in the prices of
futures contracts, a correct forecast of market trends may still not result in a
successful hedging transaction.
2
<PAGE>
REPURCHASE AGREEMENTS
Repurchase agreements, as described in the Funds' Prospectus, will be entered
into only with commercial banks, brokers and dealers considered by the Funds to
be credit-worthy. The Trustees of the Funds will monitor each Fund's repurchase
agreement transactions periodically and, with the Funds' investment adviser,
will consider standards which the Funds' investment adviser will use in
reviewing the creditworthiness of any party to a repurchase agreement with a
Fund. No more than an aggregate of 15% of a Fund's net assets, at the time of
investment, will be invested in repurchase agreements having maturities longer
than seven days and other investments subject to legal or contractual
restrictions on resale, or for which there are not readily available market
quotations.
The use of repurchase agreements involves certain risks. For example, if the
seller under a repurchase agreement defaults on its obligation to repurchase the
underlying instrument at a time when the value of the instrument has declined, a
Fund may incur a loss upon its disposition. If the seller becomes insolvent and
subject to liquidation or reorganization under bankruptcy or other laws, a
bankruptcy court may determine that the underlying instrument is collateral for
a loan by the Fund and therefore is subject to sale by the trustee in
bankruptcy. Finally, it is possible that the Fund may not be able to
substantiate its interest in the underlying instrument. While the Trustees of
the Funds acknowledge these risks, it is expected that they can be controlled
through careful structuring of repurchase agreement transactions to meet
requirements for treatment as a purchase and sale under the bankruptcy laws and
through monitoring procedures designed to assure the creditworthiness of
counter-parties to such transactions.
LENDING PORTFOLIO SECURITIES.
Each Fund may lend portfolio securities to broker-dealers and other financial
institutions in amounts up to 25% of the market or other fair value for its
total assets provided that such loans are callable at any time by the Fund
utilizing this investment technique and are at all times secured by collateral
held by the Fund at least equal to 102% of the market value determined daily of
the loaned securities. The Fund utilizing this investment technique will
continue to receive any income on the loaned securities and at the same time
will earn interest on cash collateral (which will be invested in short-term debt
obligations) or a securities lending fee in the case of collateral in the form
of U.S. Government securities. A loan may be terminated at any time by either
the Fund or the borrower. Upon termination of a loan the borrower will be
required to return the securities to the Fund and any gain or loss in the market
price during the period of the loan would accrue to the Fund. If the borrower
fails to maintain the requisite amount of collateral the loan will automatically
terminate and the Fund may use the collateral to replace the loaned securities
while holding the borrower liable for any excess of the replacement cost over
the amount of the collateral.
When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan in whole or in
part as may be appropriate in order to exercise such rights if the matters
involved would have a material effect on the Fund's investment in the securities
which are the subject of the loan. The Fund may pay reasonable finders
administrative and custodial fees in connection with loans of its portfolio
securities.
As with any extension of credit there are risks of delay in recovery of the
loaned securities and in some cases loss of rights in the collateral should the
borrower of the securities fail financially. However loans of portfolio
securities will be made only to firms considered by the Funds to be creditworthy
and when the Adviser believes the consideration to be earned justifies the
attendant risks.
FOREIGN CURRENCY TRANSACTIONS
Each Fund may engage in foreign currency transactions. A forward foreign
currency exchange contract involves an obligation to purchase or sell a specific
currency at a future date which may be any fixed number of days from the date of
the contract agreed upon by the parties at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers. No Fund intends to enter into
forward contracts if it would have more than 15% of the value of its total
assets committed to such contracts on a regular or continuous basis. No Fund
will enter into such forward contracts or maintain a net exposure in such
contracts where it would be obligated to deliver an amount of foreign currency
in excess of the value of its portfolio securities and other assets denominated
in that currency. The Funds' custodian banks will segregate any asset, including
equity securities and non-investment grade debt securities, so long as the asset
is liquid, unencumbered and marked to market daily in an amount not less than
the value of a Fund's total assets committed to forward foreign currency
exchange contracts entered into for the purchase of a foreign currency. If the
value of the securities segregated declines additional cash or securities will
be added so that the segregated amount is not less than the amount of the Fund's
commitments with respect to such contracts. Generally, a Fund will not enter
into forward contracts with terms longer than one year.
FOREIGN CURRENCY OPTIONS. A foreign currency option provides the option buyer
with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period for such options any time prior to expiration.
3
<PAGE>
A call rises in value if the underlying currency appreciates. Conversely, a
put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect a Fund utilizing this technique against an
adverse movement in the value of a foreign currency, it does not limit the gain
which might result from a favorable movement in the value of such currency. For
example, if a Fund were holding securities denominated in an appreciating
foreign currency and had purchased a foreign currency put to hedge against a
decline in the value of the currency, it would not have to exercise its put.
Similarly, if a Fund had entered into a contract to purchase a security
denominated in a foreign currency and had purchased a foreign currency call to
hedge against a rise in the value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement date, the
Fund would not have to exercise its call but could acquire in the spot market
the amount of foreign currency needed for settlement.
FOREIGN CURRENCY FUTURES TRANSACTIONS. Each Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, a Fund may be able to achieve many of the same
objectives attainable through the use of foreign currency forward contracts, but
more effectively and possibly at a lower cost. Unlike forward foreign currency
exchange contracts, foreign currency futures contracts and options on foreign
currency futures contracts are standardized as to amount and delivery period and
are traded on boards of trade and commodities exchanges. It is anticipated that
such contracts may provide greater liquidity and lower cost than forward foreign
currency exchange contracts.
REGULATORY RESTRICTIONS. To the extent required to comply with Securities and
Exchange Commission Release No. IC-10666, when purchasing a futures contract or
writing a put option, each Fund will maintain in a pledged account any asset,
including equity securities and non-investment grade debt so long as the asset
is liquid, unencumbered and marked to market daily equal to the value of such
contracts. To the extent required to comply with Commodity Futures Trading
Commission Regulation 4.5 and thereby avoid "commodity pool operator" status, a
Fund will not enter into a futures contract or purchase an option thereon if
immediately thereafter the initial margin deposits for futures contracts
(including foreign currency and all other futures contracts) held by the Fund
plus premiums paid by it for open options on futures would exceed 5% of the
Fund's total assets. No Fund will engage in transactions in financial futures
contracts or options thereon for speculation, but only to attempt to hedge
against changes in market conditions affecting the values of securities which
the Fund holds or intends to purchase. When futures contracts or options thereon
are purchased to protect against a price increase on securities intended to be
purchased later, it is anticipated that at least 75% of such intended purchases
will be completed. When other futures contracts or options thereon are
purchased, the underlying value of such contracts will at all times not exceed
the sum of: (1) accrued profit on such contracts held by the broker; (2) cash or
high quality money market instruments set aside in an identifiable manner; and
(3) cash proceeds from investments due in 30 days.
EMERGING MARKET SECURITIES
Each Fund may invest in countries or regions with relatively low gross
national product per capita compared to the world's major economies, and in
countries or regions with the potential for rapid economic growth (emerging
markets). Emerging markets will include any country: (i) having an "emerging
stock market" as defined by the International Finance Corporation; (ii) with
low-to-middle-income economies according to the International Bank for
Reconstruction and Development (the "World Bank"); (iii) listed in World Bank
publications as developing; or (iv) determined by the Adviser to be an emerging
market as defined above. Each Fund may also invest in securities of: (i)
companies the principal securities trading market for which is an emerging
market country; (ii) companies organized under the laws of, and with a principal
office in, an emerging market country, or (iii) companies whose principal
activities are located in emerging market countries.
The risks of investing in foreign securities may be intensified in the case
of investments in emerging markets. Securities of many issuers in emerging
markets may be less liquid and more volatile than securities of comparable
domestic issuers. Emerging markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when a portion of the assets of a Fund is not invested and no
return is earned thereon. The inability of a Fund to make intended security
purchases due to settlement problems could cause a Fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to the Fund due to subsequent
declines in value of the portfolio securities or, if the Fund has entered into a
contract to sell the security, in possible liability to the purchaser.
Securities prices in emerging markets can be significantly more volatile than in
the more developed nations of the world, reflecting the greater uncertainties of
investing in less established markets and economies. In particular, countries
with emerging markets may have relatively unstable governments, present the risk
of nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. Local securities markets
may trade a small number of securities and may be unable to respond effectively
to increases in trading volume, potentially making prompt liquidation of
substantial holdings difficult or impossible at times. Securities of issuers
located in countries with emerging markets may have limited marketability and
may be subject to more abrupt or erratic price movements.
4
<PAGE>
Certain emerging markets may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. A Fund could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the application
to the Fund any restrictions on investments. Investments in certain foreign
emerging market debt obligations may be restricted or controlled to varying
degrees. These restrictions or controls may at times preclude investment in
certain foreign emerging market debt obligations and increase the expenses of a
Fund.
INVESTING IN SMALL CAP ISSUERS
Under normal market conditions, the Global Fund expects to invest at least
65% of its total assets in equity securities of small and medium capitalization
companies. Market capitalization of such issuers are determined at the time of
purchase. While the issuers in which the Fund will primarily invest may offer
greater opportunities for capital appreciation than larger capitalization
issuers, investments in smaller companies may have limited product lines,
markets or financial resources, or they may be dependent on a limited management
group. Full development of these companies takes time and, for this reason, the
Fund should be considered as a long-term investment and not as a vehicle for
seeking short-term profits, nor should an investment in the Fund be considered a
complete investment program. In addition, many small company stocks trade less
frequently and in smaller volume, and may be subject to more abrupt or erratic
price movements than stocks of large companies. The securities of small
companies may also be more sensitive to market changes than the securities of
large companies. These factors may result in above-average fluctuations in the
net asset value of the Fund's shares. The Fund is not an appropriate investment
for individual investors requiring safety of principal or a predictable return
of income from their investment.
ADDITIONAL RISK FACTORS
As a result of its investments in foreign securities, each Fund may receive
interest or dividend payments, or the proceeds of the sale or redemption of such
securities, in the foreign currencies in which such securities are denominated.
In that event, a Fund may convert such currencies into dollars at the then
current exchange rate. Under certain circumstances, however, such as where the
Adviser believes that the applicable rate is unfavorable at the time the
currencies are received or the Adviser anticipates, for any other reason, that
the exchange rate will improve, a Fund may hold such currencies for an
indefinite period of time.
In addition, a Fund may be required to receive delivery of the foreign
currency underlying forward foreign currency contracts it has entered into. This
could occur, for example, if an option written by a Fund is exercised or the
Fund is unable to close out a forward contract. A Fund may hold foreign currency
in anticipation of purchasing foreign securities. A Fund may also elect to take
delivery of the currencies underlying options or forward contracts if, in the
judgment of the Adviser, it is in the best interest of the Fund to do so. In
such instances as well, the Fund may convert the foreign currencies to dollars
at the then current exchange rate, or may hold such currencies for an indefinite
period of time.
While the holding of currencies will permit a Fund to take advantage of
favorable movements in the applicable exchange rate, it also exposes the Fund to
risk of loss if such rates move in a direction adverse to the Fund's position.
Such losses could reduce any profits or increase any losses sustained by the
Fund from the sale or redemption of securities, and could reduce the dollar
value of interest or dividend payments received. In addition, the holding of
currencies could adversely affect the Fund's profit or loss on currency options
or forward contracts, as well as its hedging strategies.
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
The Funds' fundamental policies as they affect any Fund cannot be changed
without the approval vote of a majority of the outstanding shares of such Fund,
which is the lesser of (i) 67% or more of the voting securities of such Fund
present at a meeting if the holders of more than 50% of the outstanding voting
securities of such Fund are present or represented by proxy or (ii) more than
50% of the outstanding voting securities of such Fund. A proposed change in
fundamental policy or investment objective will be deemed to have been
effectively acted upon with respect to any Fund if a majority of the outstanding
voting securities of that Fund votes for the approval of the proposal as
provided above, notwithstanding (1) that such matter has not been approved by a
majority of the outstanding securities of any other Fund affected by such matter
and (2) that such matter has not been approved by a majority of the outstanding
voting securities of the Trust.
The following investment restrictions are fundamental policies of the Funds
with respect to all Funds and may not be changed except as described above. The
Funds may not:
1. Purchase for any Fund securities of any issuer, other than obligations
issued or guaranteed as to principal and interest by the United States
Government or its agencies or instrumentalities, if immediately thereafter (i)
more than 5% of such Fund's total assets (taken at market value) would be
invested in the securities of such issuer or (ii) more than 10% of the
outstanding securities of any class of such issuer would be held by such Fund or
by all Funds of the Trust in the aggregate.
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2. Act as securities underwriter except as it technically may be deemed to be
an underwriter under the Securities Act of 1933 in selling a portfolio security.
3. Purchase securities on margin, but it may obtain short-term credit as may
be necessary for the clearance of purchases and sales of securities.
4. Make short sales of securities or maintain a short position unless
against-the-box or unless at the time of sale the Fund owns an equal amount of
such securities.
5. Make cash loans, except that the Funds may (i) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not, and (ii) enter into
repurchase agreements, provided that no more than 15% of any Fund's net assets
(taken at market value) may be subject to repurchase agreements maturing in more
than seven days.
6. Make securities loans, except that the Funds may make loans of the
portfolio securities of any Fund, provided that the market value of the
securities subject to any such loans does not exceed 25% of the value of the
total assets (taken at market value) of such Fund.
7. Make investments in real estate (including real estate limited
partnerships) or commodities or commodity contracts, although (i) the Funds may
purchase securities of issuers which deal in real estate or commodities and may
purchase securities which are secured by interests in real estate, specifically,
securities issued by real estate investment trusts and (ii) any Fund may engage
in transactions in financial futures contracts and related options, provided
that the sum of the initial margin deposits on such Fund's existing futures
positions and the premiums paid for related options would not exceed in the
aggregate 5% of such Fund's total assets.
8. Invest in oil, gas or other mineral leases or exploration or development
programs, although the Funds may purchase securities of issuers which engage in
whole or in part in such activities.
9. Invest in puts, calls, straddles and any combination thereof, except that
any Fund may (i) write (sell) exchange-traded covered call options on portfolio
securities and on securities indices and engage in related closing purchase
transactions and (ii) invest up to 2% of its total assets in exchange-traded
call and put options on securities and securities indices.
10. Purchase securities of companies for the purpose of exercising management
or control.
11. Participate in a joint or joint and several trading account in
securities.
12. Purchase or retain securities of any issuer if any officer or Trustee of
the Trust, or officer or director of its investment adviser(s), owns
beneficially more than 1/2 of 1% of the outstanding securities or shares, or
both, of such issuer and all such persons owning more than 1/2 of 1% of such
securities or shares together own beneficially more than 5% of such securities
or shares.
13. Borrow money, except that the Funds may (i) borrow money for any Fund for
temporary administrative purposes provided that any such borrowing does not
exceed 10% of the value of the total assets (taken at market value) of such Fund
and (ii) borrow money for any Fund for investment purposes, provided that any
such borrowing for investment purposes with respect to any such Fund is (a)
authorized by the Trustees prior to any public distribution of the shares of
such Fund or is authorized by the shareholders of such Fund thereafter, (b) is
limited to 33 1/3% of the value of the total assets (taken at market value) of
such Fund, and (c) is subject to an agreement by the lender that any recourse is
limited to the assets of that Fund with respect to which the borrowing has been
made. No Fund may invest in portfolio securities while the amount of borrowing
of the Fund exceeds 5% of the total assets of such Fund. Borrowing for
investment purposes has not been authorized for any Fund whose shares are
offered by the Funds.
14. Pledge, mortgage or hypothecate the assets of any Fund to an extent
greater than 10% of the total assets (taken at market value) of such Fund to
secure borrowings made pursuant to the provisions of item 13 above.
15. Issue senior securities, as defined in the 1940 Act, provided, however,
that such Fund may secure borrowings made pursuant to the provisions of item 13
above; and provided, further, that such Fund's obligations under interest-rate
swaps, reverse repurchase agreements, when issued, delayed-delivery and
forward-commitment transactions and similar transactions are not treated as
senior securities if covering assets are appropriately segregated; such Fund may
not pledge its assets other than to secure such issuances of senior securities
or such borrowings or in connection with hedging transactions, short sales,
when-issued and forward-commitment transactions and similar investment
strategies; for purposes of this restriction, the term "total assets"
includes the proceeds of senior securities issued but is reduced by any
liabilities and indebtedness not constituting senior securities or excluded from
treatment as senior securities by this restriction.
16. Purchase securities of other investment companies, except that a Fund may
make such purchase (a) in the open market involving no commission or profit to a
sponsor or dealer (other than customary broker's commissions), provided that
immediately thereafter (i) not more than 10% of the Fund's total assets would be
invested in such securities and (ii) not more
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than 3% of the stock of another investment company would be owned by the Fund,
or (b) as part of a merger, consolidation, or acquisition of assets.
17. Invest in amounts greater than 25% of a Fund's assets in a particular
"industry."
The Funds may purchase illiquid securities, including repurchase agreements
providing for settlement more than seven days after notice and restricted
securities (securities that must be registered with the Securities and Exchange
Commission before they can be sold to the public) not deemed to be liquid, but
such securities will not constitute more than 15% of each Fund's net assets.
The Board of Trustees, or the Adviser acting at its direction, values these
securities, taking into consideration quotations available from broker-dealers
and pricing services and other information deemed relevant.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values of portfolio securities or amount of net assets shall not be
considered a violation of the restrictions.
For the Global Small Cap Fund, industry classifications are established by
reference to the Directory of Companies Filing Annual Reports published by the
SEC.
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements or
reports to shareholders or prospective investors. Performance information in
advertisements and sales literature may be expressed as the yield of a Class or
Fund and as the total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in such Class of Shares of a Fund
over periods of 1, 5 and 10 years or up to the life of a Fund, calculated for
each Class separately pursuant to the following formula: P(1 + T)(n) = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures reflect the deduction of a proportional share of each Class's
expenses (on an annual basis), deduction of the maximum initial sales load in
the case of Class A Shares and the maximum contingent deferred sales charge
applicable to a complete redemption of the investment in the case of Class B
Shares, and assume that all dividends and distributions are reinvested when
paid.
The Funds may, from time to time, include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare its performance results to other investment
or savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week and Investor's Business Daily, Stanger's Mutual
Fund Monitor, The Stanger Register, Stanger's Investment Adviser, The Wall
Street Journal, The New York Times, Consumer Reports, Registered Representative,
Financial Planning, Financial Services Weekly, Financial World, U.S. News and
World Report, Standard & Poor's The Outlook, and Personal Investor. The Funds
may, from time to time, illustrate the benefits of tax deferral by comparing
taxable investments to investments made through tax-deferred retirement plans.
The total return may also be used to compare the performance of the Funds
against certain widely acknowledged outside standards or indices for stock and
bond market performance, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"), Standard & Poor's 400 MidCap Index ("S&P 400"), Dow Jones
Industrial Average, Russell 2000 Index, Russell 2000 Growth Index, Europe
Australia Far East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate
Index and Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time,
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital gains
components; or cite separately as a return figure the equity or bond portion of
a Fund's portfolio; or compare a Fund's equity or bond return future to
well-known indices of market performance, including, but not limited to: the S&P
500, Dow Jones Industrial Average, CS First Boston High Yield Index and Salomon
Brothers Corporate and Government Bond Indices.
For the New Asia Fund, the average annual total return for the one-year
period and since inception September 4, 1996 through July 31, 1999 for Class A
Shares was 45.67% and (6.01)%, respectively, and for Class B Shares was 47.84%
and (6.07)%, respectively. For the Global Small Cap Fund, the average annual
total return for the one-year period and since inception September 4, 1996
through July 31, 1999 for Class A Shares was 0.95% and 4.59%, respectively, and
for Class B Shares was 1.46% and 4.67%, respectively.
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A Fund also may quote annual, average annual and annualized total return and
aggregate total return performance data, for each class of shares of such Fund,
both as a percentage and as a dollar amount based on a hypothetical $10,000
investment for various periods other than those noted below. Such data will be
computed as described above, except that (1) the rates of return calculated will
not be average annual rates, but rather, actual annual, annualized or aggregate
rates of return and (2) the maximum applicable sales charge will not be included
with respect to annual, annualized or aggregate rate of return calculations.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser and/or Subadviser (throughout this section the "Adviser") places
orders for the purchase and sale of securities, supervises their execution and
negotiates brokerage commissions on behalf of the Funds. It is the practice of
the Adviser to seek the best prices and execution of orders and to negotiate
brokerage commissions which the Adviser's opinion are reasonable in relation to
the value of the brokerage services provided by the executing broker. Brokers
who have executed orders for the Funds are asked to quote a fair commission for
their services. If the execution is satisfactory and if the requested rate
approximates rates currently being quoted by the other brokers selected by the
Adviser, the rate is deemed by the Adviser to be reasonable. Brokers may ask for
higher rates of commission if all or a portion of the securities involved in the
transaction are positioned by the broker, if the broker believes it has brought
the Funds an unusually favorable trading opportunity, or if the broker regards
its research services as being of exceptional value, and payment of such
commissions is authorized by the Adviser after the transaction has been
consummated. If the Adviser more than occasionally differs with the broker's
appraisal of opportunity or value, the broker would not be selected to execute
trades in the future.
The Adviser believes that the Funds benefit with a securities industry
comprised of many and diverse firms and that the long-term interest of
shareholders of the Funds is best served by its brokerage policies which include
paying a fair commission rather than seeking to exploit its leverage to force
the lowest possible commission rate. The primary factors considered in
determining the firms to which brokerage orders are given are the Adviser's
appraisal of: the firm's ability to execute the order in the desired manner; the
value of research services provided by the firm; and the firm's attitude toward
and interest in mutual funds in general, including the sale of mutual funds
managed and sponsored by the Adviser. The Adviser does not offer or promise to
any broker an amount or percentage of brokerage commissions as an inducement or
reward for the sale of shares of the Funds. Over-the-counter purchases and sales
are transacted directly with principal market-makers except in those
circumstances where in the opinion of the Adviser better prices and execution
are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor federal,
state, local and foreign political developments; many of the brokers also
provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Trust. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Trust and its shareholders.
The Trust has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to lower
commission costs on a per-share and per-dollar basis. According to the bunching
procedures, the Adviser shall aggregate transactions unless it believes in its
sole discretion that such aggregation is inconsistent with its duty to seek best
execution (which shall include the duty to seek best price) for the Trust. No
advisory account of the Adviser is to be favored over any other account and each
account that participates in an aggregated order is expected to participate at
the average share price for all transactions of the Adviser in that security on
a given business day, with all transaction costs shared pro rata based on the
Trust's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more
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shares than the amount of shares it would have received or sold had the
aggregated order been completely filled. The Trustees will annually review these
procedures or as frequently as shall appear appropriate.
A high rate of Portfolio turnover involves a correspondingly higher amount of
brokerage commissions and other costs which must be borne directly by the Trust
and indirectly by shareholders.
During the fiscal years ended July 31, 1997, 1998 and 1999, brokerage
commissions paid by the Funds totalled $294,129, $212,101 and $108,305,
respectively. In the fiscal year ended July 31, 1999, no commissions were paid
to the Distributor for portfolio transactions. Brokerage commissions of $10,328
paid during the fiscal year ended July 31, 1999 were paid on portfolio
transactions aggregating $3,586,773 executed by brokers who provided research
and other statistical and factual information.
SERVICES OF THE ADVISERS
The Trust's investment adviser is Phoenix-Aberdeen International Advisors,
LLC (the "Adviser"), which is a Delaware limited liability company formed in
1996 and having a place of business located at One American Row, Hartford,
Connecticut 06102. The Adviser is jointly owned and managed by PM Holdings,
Inc., a direct subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life"), and Aberdeen Fund Managers, Inc., a wholly-owned
subsidiary of Aberdeen Asset Management plc. Based upon the diverse range of
portfolio holdings contemplated and the expertise available through certain
affiliates, the Adviser has engaged Phoenix Investment Counsel, Inc. ("PIC") and
Aberdeen Fund Managers, Inc. ("Aberdeen") as subadvisers.
Phoenix Home Life was founded in 1851 and is in the business of writing
individual and group life and health insurance and annuities. The principal
office of Phoenix Home Life is located at One American Row, Hartford,
Connecticut, 06115. Phoenix Home Life is the majority shareholder of Phoenix
Investment Partners, Ltd. ("PXP"). PXP is a publicly-traded independent
registered investment advisory firm and has served investors for over 70 years.
It manages approximately $58 billion in assets (as of September 30, 1999)
through its investment partners: Aberdeen Fund Managers, Inc. (Aberdeen) in
Aberdeen, London, Singapore and Fort Lauderdale; Duff & Phelps Investment
Management Co. (Duff & Phelps) in Chicago and Cleveland; Roger Engemann &
Associates, Inc. (Engemann) in Pasadena; Seneca Capital Management LLC (Seneca)
in San Francisco; Zweig/Glaser Advisers (Zweig) in New York; and Phoenix
Investment Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions) in
Hartford, Sarasota and Scotts Valley, CA, respectively.
PIC is located at 56 Prospect Street, Hartford, Connecticut 06115. PIC acts
as the investment adviser for 14 other mutual funds, as subadviser to three
mutual funds, and as adviser to institutional clients. PIC has acted as an
investment adviser for over sixty years. PIC was originally organized in 1932 as
John P. Chase, Inc. As of September 30, 1999, PIC had approximately $23.4
billion assets under management. Philip R. McLoughlin, a Trustee and officer of
the Fund, is a director of PIC.
Aberdeen is located at 1 Financial Plaza, Suite 2210, Fort Lauderdale, FL
33394. Aberdeen is a wholly-owned subsidiary of Aberdeen Asset Management PLC
based in Aberdeen, Scotland. Together with its subsidiaries, Aberdeen Asset
Management PLC provides investment management services to unit and investment
trusts, segregated pension funds and other institutional and private portfolios,
and, through Aberdeen, U.S. mutuals funds. Aberdeen has served as subadviser to
the Funds and to the Aberdeen New Asia Series of The Phoenix Edge Series Fund
since their inception in 1996. Aberdeen also has served as subadviser to
Phoenix-Aberdeen International Fund, Phoenix-Aberdeen Worldwide Opportunities
Fund and the International Series of The Phoenix Edge Series Fund since 1998. As
of September 30, 1999, Aberdeen Asset Management PLC had $26.2 billion in assets
under management.
The investment advisory agreements provide that the Funds will bear all costs
and expenses (other than those specifically referred to as being borne by the
Adviser) incurred in the operation of the Trust. Such expenses include, but
shall not be limited to, all expenses incurred in any public offering of its
shares, including among others, interest, taxes, brokerage fees and commissions,
fees of Trustees who are not full-time employees of the Adviser or any of its
affiliates, expenses of Trustees' and shareholders' meetings including the cost
of printing and mailing proxies, expenses of insurance premiums for fidelity and
other coverage, expenses of repurchase and redemption of shares, expenses of
issue and sale of shares (to the extent not borne by its national distributor
under its agreement with the Trust), expenses of printing and mailing stock
certificates (if any) representing shares of the Trust, association membership
dues, charges of custodians, transfer agents, dividend disbursing agents and
financial agents, bookkeeping, auditing and legal expenses. The Funds will also
pay the fees and bear the expense of registering and maintaining the
registration of the Funds and its shares with the Securities and Exchange
Commission and registering or qualifying its shares under state or other
securities laws and the expense of preparing and mailing prospectuses and
reports to shareholders. If authorized by the Trustees, the Funds shall pay for
extraordinary expenses and expenses of a non-recurring nature which may include,
but not be limited to the reasonable and proportionate cost of any
reorganization or acquisition of assets and the cost of legal proceedings to
which the Funds is a party.
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The Adviser continuously furnishes an investment program for each Fund and
manages the investment and reinvestment of the assets of each Fund subject at
all times to the supervision of the Trustees. The Adviser, at its expense,
furnishes to the Funds adequate office space and facilities and certain
administrative services, including the services of any member of its staff who
serves as an officer of the Trust.
As compensation for its services to each Fund, the Adviser is entitled to a
fee, payable monthly, at an annual rate of 0.85% of the Fund's average daily net
assets. For providing cash management and other services to each Fund, as
needed, the Adviser pays a monthly fee to PIC equivalent to 0.15% of the average
daily net asset value of each Fund. For providing advisory services with respect
to the Trust's assets allocated from time to time by the Adviser, the Adviser
pays a fee to PIC equivalent to 0.40% of the average daily net asset value of
the assets of each Fund so allocated. For implementing certain portfolio
transactions and providing research and other services to each Fund, the Adviser
also pays a monthly subadvisory fee to Aberdeen Fund Managers, Inc. equivalent
to 0.40% of the average daily net asset value of the New Asia Fund and 0.40% of
the average daily net asset value of the Global Fund allocated to it by the
Adviser for management. Total management fees for the fiscal years ended July
31, 1997, 1998 and 1999 for the New Asia Fund were $105,851, $106,419 and
$84,293, respectively, and for the Global Small Cap Fund were $240,064, $301,367
and $202,386, respectively.
The Investment Advisory Agreement with the Funds provide that the Adviser
will reimburse the Funds for the amount, if any, by which the total operating
expenses of any Fund (including the Adviser's compensation, but excluding
interest, taxes, brokerage fees and commissions and extraordinary expenses) for
any fiscal year exceed the level of expenses which such Fund is permitted to
bear under the most restrictive expense limitation (which has not been waived)
imposed on mutual funds by any state in which shares of the Fund are then
qualified for sale. In the event legislation were to be adopted in each state so
as to eliminate this restriction, the Funds would take such action necessary to
eliminate this expense limitation.
The investment advisory agreements also provide that each adviser shall not
be liable to the Funds or any shareholder of the Funds for any error of judgment
or mistake of law or for any loss suffered by the Funds or by any shareholder of
the Funds in connection with the matters to which the agreement relates, except
a loss resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard on the part of such adviser in the performance of its duties
thereunder.
Provided that it has been approved by a vote of the majority of the
outstanding shares of a Fund of the Funds which is subject to its terms and
conditions, each agreement continues from year to year with respect to such Fund
so long as (1) such continuance is approved at least annually by the Trustees or
by a vote of the majority of the outstanding voting securities of such Fund and
(2) the terms and any renewal of the agreements with respect to such Fund have
been approved by the vote of a majority of the Trustees who are not parties to
the agreement or "interested persons," as that term is defined in the Investment
Company Act of 1940, of the Funds or the relevant adviser, of any such party
cast in person at a meeting called for the purpose of voting on such approval.
On sixty days' written notice and without payment of any penalty the agreements
may be terminated as to the Funds or as to a Fund by the Trustees or by the
relevant adviser and may be terminated as to a Fund by a vote of the majority of
the outstanding voting securities of such Fund. Each agreement automatically
terminates upon its assignment (within the meaning of the Investment Company
Act). The Investment Advisory Agreement provides that upon its termination, or
at the request of the adviser, the Funds will eliminate all references to
"Phoenix" and/or "Phoenix-Aberdeen" from its name, and will not thereafter
transact business in a name using the word "Phoenix" or "Phoenix-Aberdeen."
SERVICES OF THE ADMINISTRATOR
Phoenix Investment Partners, Ltd. (the "Administrator") serves as
administrator for the Trust. Under the terms of the Administration Agreement,
the Administrator will assist in maintaining office facilities, furnish clerical
services, office supplies and stationery, prepare and file tax returns of the
Trust, monitor the Trust's expense accruals and pay all expenses upon proper
authorization from the Trust, monitor the Funds' status as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
monitor and make recommendations concerning fidelity bond coverage, monitor
compliance with the policies and limitations of the Funds as set forth in the
Funds' governing documents, supervise the external audit and tax return
preparation by the Trust's auditor, and prepare and/or coordinate all materials
for the Board of Trustees' meetings. As compensation, the Administrator receives
a fee, computed daily and payable monthly, at the annual rate of 0.15% of the
average daily net assets of the Trust. For the fiscal years ended July 31, 1997,
1998, and 1999 the administration fees for the New Asia Fund were $18,680,
$18,882 and $14,812, respectively, and for the Global Small Cap Fund were
$42,364, $53,182 and $35,715, respectively.
The Agreement continues in effect from year to year provided such continuance
is specifically approved at least annually by the Trust's Board of Trustees
including a majority of the trustees who are not interested persons or by a vote
of a majority of the outstanding voting securities of the Trust. The Agreement
automatically terminates upon its assignment and may be terminated by either
party at any time upon not less than 60 days written notice.
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NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Funds do not price securities on
weekends or United States' national holidays, the net asset value of a Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Funds. The net asset value per share of a Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a Class, plus that Class's
distribution fee and any other expenses allocated solely to that Class, are
deducted from the proportionate interest of such Class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that Class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for any Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of such Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time a Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. However, both the minimum initial and subsequent investment amounts are
$25 for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by the Distributor, or pursuant to the Systematic Exchange
privilege or for an individual retirement account (IRA). In addition, there are
no subsequent investment minimum amounts in connection with the reinvestment of
dividend or capital gain distributions. Completed applications for the purchase
of shares should be mailed to: Phoenix Funds, c/o State Street Bank and Trust
Company, P.O. Box 8301, Boston, MA 02266-8301.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their net
asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative").
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, whether the investor
wishes to receive distributions in cash or to reinvest them in additional shares
of the Funds, and other circumstances. Investors should consider whether, during
the anticipated life of their investment in a Fund, the accumulated continuing
distribution and services fees and contingent deferred sales charges on Class B
Shares would be less than the initial sales charge and accumulated distribution
services fee on Class A Shares purchased at the same time.
Dividends paid by the Funds, if any, with respect to each Class of Shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution and services fees and any incremental
transfer agency costs relating to each Class of Shares will be borne exclusively
by that Class. See "Dividends, Distributions and Taxes."
CLASS A SHARES
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class A
Shares are subject to ongoing distribution and service fees at an annual rate of
up to 0.25% of
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the Funds' aggregate average daily net assets attributable to the Class A
Shares. In addition, certain purchases of Class A Shares qualify for reduced
initial sales charges.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions.
Class B Shares are subject to ongoing distribution and service fees at an
aggregate annual rate of up to 1.00% of the Funds' aggregate average daily net
assets attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted. The purpose of the conversion feature is to relieve the holders of
the Class B Shares that have been outstanding for a period of time sufficient
for the adviser and the Distributor to have been compensated for distribution
expenses related to the Class B Shares from most of the burden of such
distribution related expenses.
Class B Shares include all shares purchased, pursuant to the deferred sales
charge alternative, which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and service fees. Such
conversion will be on the basis of the relative net asset value of the two
Classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Fund account will be considered to be held in a separate
subaccount. Each time any Class B Shares in the shareholder's Fund account
(other than those in the subaccount) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the subaccount will also convert to
Class A Shares.
CLASS A SHARES-REDUCED INITIAL SALES CHARGES
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
trustee, director or officer of the Phoenix Funds, the Phoenix-Engemann Funds,
Phoenix-Seneca Funds or any other mutual fund advised, subadvised or distributed
by the Adviser, Distributor or any of their corporate affiliates (an "Affiliated
Phoenix Fund"); (2) any director or officer, or any full-time employee or sales
representative (for at least 90 days) of the Adviser or Distributor; (3)
registered representatives and employees of securities dealers with whom
Distributor has sales agreements; (4) any qualified retirement plan exclusively
for persons described above; (5) any officer, director or employee of a
corporate affiliate of the Adviser or Distributor; (6) any spouse, child,
parent, grandparent, brother or sister of any person named in (1), (2), (3) or
(5) above; (7) employee benefit plans for employees of the Adviser, Distributor
and/or their corporate affiliates; (8) any employee or agent who retires from
Phoenix Home Life, Distributor and/or their corporate affiliates; (9) any
account held in the name of a qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix Fund or any other Affiliated Phoenix Fund qualified plan; (11) any
Phoenix Home Life separate account which funds group annuity contracts offered
to qualified employee benefit plans; (12) any state, county, city, department,
authority or similar agency prohibited by law from paying a sales charge; (13)
any fully matriculated student in any U.S. service academy; (14) any unallocated
account held by a third-party administrator, registered investment adviser, Fund
company, or bank Fund department which exercises discretionary authority and
holds the account in a fiduciary, agency, custodial or similar capacity, if in
the aggregate such accounts held by such entity equal or exceed $1,000,000; (15)
any person who is investing redemption proceeds from investment companies other
than the Phoenix Funds or any other Affiliated Phoenix Fund if, in connection
with the purchases or redemption of the redeemed shares, the investor paid a
prior sales charge provided such investor supplies verification that the
redemption occurred within 90 days of the Phoenix Fund purchase and that a sales
charge was paid; (16) any deferred compensation plan established for the benefit
of any Phoenix Fund or any other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (16) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Fund;
(17) purchasers of Class A Shares bought through investment advisers and
financial planners who charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their clients;
(18) retirement plans and deferred compensation plans and trusts used to fund
those plans (including, for example, plans qualified or created under sections
401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy
shares for their own accounts, in each case if those purchases are made through
a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for such purchases; (19) 401(k) participants
in the Merrill
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Lynch Daily K Plan (the "Plan") if the Plan has at least $3 million in assets or
500 or more eligible employees; (20) clients of investment advisors or financial
planners who buy shares for their own accounts but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of the investors
described in (17) through (20) may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised, subadvised
or distributed by the Adviser or Distributor or any corporate affiliate of
either or both the Adviser and Distributor provided such other mutual fund
extends reciprocal privileges to shareholders of the Phoenix Fund.
LETTER OF INTENT. If you sign a Letter of Intent, your purchase of any class
of shares of this or any other Affiliated Phoenix Fund (other than Phoenix Money
Market Fund Series Class A Shares), if made by the same person within a 13-month
period, will be added together to determine whether you are entitled to an
immediate reduction in sales charges. Sales charges are reduced based on the
overall amount you indicate that you will buy under the Letter of Intent. The
Letter of Intent is a mutually non-binding arrangement between you and the
Distributor. Since the Distributor doesn't know whether you will ultimately
fulfill the Letter of Intent, shares worth 5% of the amount of each purchase
will be set aside until you fulfill the Letter of Intent. When you buy enough
shares to fulfill the Letter of Intent, these shares will no longer be
restricted. If, on the other hand, you do not satisfy the Letter of Intent, or
otherwise wish to sell any restricted shares, you will be given the choice of
either buying enough shares to fulfill the Letter of Intent or paying the
difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you do
not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A Shares before B
Shares, respectively. Oldest shares will be redeemed before selling newer
shares. Any remaining shares will then be deposited to your account.
RIGHT OF ACCUMULATION. Your purchase of any class of shares of this or any
other Affiliated Phoenix Fund, if made over time by the same person may be added
together to determine whether the combined sum entitles you to a prospective
reduction in sales charges. You must provide certain account information to the
Distributor to exercise this right.
ASSOCIATIONS. Certain groups or associations may be treated as a "person" and
qualify for reduced Class A share sales charges. The group or association must:
(1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge; (3)
work through an investment dealer; or (4) not be a group whose sole reason for
existing is to consist of members who are credit card holders of a particular
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
CLASS B SHARES--WAIVER OF SALES CHARGES
The CDSC is waived on the redemption (sale) of Class B Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(b) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
from the Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, in
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B
Shares of this or any other Affiliated Phoenix Fund; (g) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (h) based on the systematic withdrawal program. If,
as described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's estate, the
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CDSC will be waived on any redemption from the estate account occurring within
one year of the death. If the Class B Shares are not redeemed within one year of
the death, they will remain subject to the applicable CDSC.
CONVERSION FEATURES--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are purchased. Conversion will be on the basis
of the then-prevailing net asset value of Class A and B Shares. There is no
sales load, fee or other charge for this feature. Class B Shares acquired
through dividend or distribution reinvestments will be converted into Class A
Shares at the same time that other Class B Shares are converted based on the
proportion that the reinvested shares bear to purchased Class B Shares. The
conversion feature is subject to the continuing availability of an opinion of
counsel or a ruling of the Internal Revenue Service that the assessment of the
higher distribution fees and associated costs with respect to Class B Shares
does not result in any dividends or distributions constituting "preferential
dividends" under the Code, and that the conversion of shares does not constitute
a taxable event under federal income tax law. If the conversion feature is
suspended, Class B Shares would continue to be subject to the higher
distribution fee for an indefinite period. Even if the Fund was unable to obtain
such assurances, it might continue to make distributions if doing so would
assist in complying with its general practice of distributing sufficient income
to reduce or eliminate federal taxes otherwise payable by the Fund.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
EXCHANGES
Under certain circumstances, shares of any Affiliated Phoenix Fund may be
exchanged for shares of the same Class of another Affiliated Phoenix Fund on the
basis of the relative net asset values per share at the time of the exchange.
Exchanges are subject to the minimum initial investment requirement of the
designated Fund or Series, except if made in connection with the Systematic
Exchange privilege. Shareholders may exchange shares held in book-entry form for
an equivalent number (value) of the same Class of shares of any other Affiliated
Phoenix Fund, if currently offered. Exchanges will be based upon each fund's net
asset value per share next computed after the close of business, without sales
charge. On exchanges with share classes that carry a contingent deferred sales
charge, the CDSC schedule of the original shares purchased continues to apply.
The exchange of shares is treated as a sale and purchase for federal income tax
purposes (see also "Dividends, Distributions and Taxes").
SYSTEMATIC EXCHANGES. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same Class of shares of another Affiliated Phoenix Fund automatically on a
monthly, quarterly, semiannual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same Class
of another Affiliated Phoenix Fund. This requirement does not apply to Phoenix
"Self Security" program participants. Systematic exchanges will be executed upon
the close of business on the 10th day of each month or the next succeeding
business day. Systematic exchange forms are available from the Distributor.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS
If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that any dividends
and distributions paid with respect to shares in that account be automatically
reinvested in a single account of one of the other Affiliated Phoenix Funds at
net asset value. You should obtain a current prospectus and consider the
objectives and policies of each fund carefully before directing dividends and
distributions to another fund. Reinvestment election forms and prospectuses are
available from Equity Planning. Distributions may also be mailed to a second
payee and/or address. Requests for directing distributions to an alternate payee
must be made in writing with a signature guarantee of the registered owner(s).
To be effective with respect to a particular dividend or distribution,
notification of the new distribution option must be received by the Transfer
Agent at least three days prior to the record date of such dividend or
distribution. If all shares in your account are repurchased or redeemed or
transferred between the record date and the payment date of a dividend or
distribution, you will receive cash for the dividend or distribution regardless
of the distribution option selected.
INVEST-BY-PHONE
This expedited investment service allows a shareholder to make an investment
in an account by requesting a transfer of funds from the balance of their bank
account. Once a request is phoned in, Equity Planning will initiate the
transaction by wiring a request for monies to the shareholder's commercial bank,
savings bank or credit union via Automated Clearing House (ACH). The
shareholder's bank, which must be an ACH member, will in turn forward the monies
to Equity Planning for credit to the
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shareholder's account. ACH is a computer-based clearing and settlement operation
established for the exchange of electronic transactions among participating
depository institutions.
To establish this service, please complete an Invest-by-Phone Application and
attach a voided check if applicable. Upon Equity Planning's acceptance of the
authorization form (usually within two weeks) shareholders may call toll free
(800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and amount to be invested must be
communicated to Equity Planning. Equity Planning will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of the
verbal instructions. The Fund may delay the mailing of a check for redemption
proceeds of Fund shares purchased with a check or via Invest-by-Phone service
until the Fund has assured itself that good payment has been collected for the
purchase of the shares, which may take up to 15 days. The Fund and Equity
Planning reserve the right to modify or terminate the Invest-by-Phone service
for any reason or to institute charges for maintaining an Invest-by-Phone
account.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to periodically redeem a portion
of your account on a predetermined monthly, quarterly, semiannual or annual
basis. A sufficient number of full and fractional shares will be redeemed so
that the designated payment is made on or about the 20th day of the month.
Shares are tendered for redemption by the Transfer Agent, as agent for the
shareowner, on or about the 15th of the month at the closing net asset value on
the date of redemption. The Systematic Withdrawal Program also provides for
redemptions to be tendered on or about the 10th, 15th or 25th of the month with
proceeds to be directed through Automated Clearing House (ACH) to your bank
account. In addition to the limitations stated below, withdrawals may not be
less than $25 and minimum account balance requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. The purchase
of shares while participating in the withdrawal program will ordinarily be
disadvantageous to the Class A Shares investor since a sales charge will be paid
by the investor on the purchase of Class A Shares at the same time as other
shares are being redeemed. For this reason, investors in Class A Shares may not
participate in an automatic investment program while participating in the
Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any applicable
contingent deferred sales charge on all shares redeemed. Accordingly, the
purchase of Class B Shares will generally not be suitable for an investor who
anticipates withdrawing sums in excess of the above limits shortly after
purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Trust to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more after
receipt of the check. See the Funds' current Prospectus for further information.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemptions by Class B shareholders will be subject to the applicable
deferred sales charge, if any.
REDEMPTION OF SMALL ACCOUNTS
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 30 days written notice to the shareholder mailed to the address
of record. During the 60 day period, the shareholder has the right to add to the
account to bring its value to $200 or more. See the Funds' current Prospectus
for more information.
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BY MAIL
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Trust redeem the shares. See the Funds' current
Prospectus for more information.
TELEPHONE REDEMPTIONS
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect unless the
Securities and Exchange Commission, by order, permits the withdrawal thereof. In
case of a redemption in kind, securities delivered in payment for shares would
be readily marketable and valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when he sold the securities.
ACCOUNT REINSTATEMENT PRIVILEGE
Shareholders who may have overlooked features of their investment at the time
they redeemed have a privilege of reinvestment of their investment at net asset
value. See the Funds' current Prospectus for more information and conditions
attached to this privilege.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to remain qualified as a regulated investment company under
certain provisions of the Internal Revenue Code, as amended ("Code"). Under such
provisions, the Funds will not be subject to federal income tax on such part of
its ordinary income and net realized capital gains which it distributes to
shareholders provided it meets certain distribution requirements. To qualify for
treatment as a regulated investment company, the Funds generally must, among
other things, derive in each taxable year at least 90% of its gross income from
dividends, interest and gains from the sale or disposition of securities. If, in
any taxable year, each Fund does not qualify as a regulated investment company
all of the Funds' taxable income will be taxed to the Funds at corporate rates.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company, if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of its net ordinary income, with certain adjustments,
plus 98% of each Fund's net capital gains for the 12-month period ending on
October 31 of such calendar year. In addition, an amount equal to any
undistributed investment company taxable income or capital gain net income from
the previous reporting year must also be distributed to avoid the excise tax.
The excise tax is imposed on the amount by which the regulated investment
company does not meet the foregoing distribution requirements. If each Fund has
taxable income that would be subject to the excise tax, each Fund intends to
distribute such income so as to avoid payment of the excise tax.
Under another provision of the Code, any dividend declared by the Funds to
shareholders of record in October, November or December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31, provided that the dividend is actually paid by the Funds in January
of the following year.
Under certain circumstances, the sales charge incurred in acquiring shares of
the Funds may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of the Funds are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a sales charge or
at a reduced sales charge. In that case, the gain or loss realized on the
disposition will be determined by excluding the charge incurred in a acquiring
those shares. This exclusion applies to the extent that the otherwise applicable
sales charge with respect to the newly acquired shares is reduced as a result of
the shareholder having incurred a sales charge initially. The portion of the
sales charge affected by this rule will be treated as a sales charge paid of the
new shares.
Distributions by the Funds reduce the net asset value of each Fund's shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the share, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by the Funds. The
price of shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.
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Some shareholders may be subject to withholding of Federal income tax on
dividends and redemption payments from the Funds backup withholding at the rate
of 31%. Corporate shareholders and certain other shareholders specified in the
Code generally are exempt from such backup withholding. Generally, shareholders
subject to backup withholding will be (i) those for whom a certified taxpayer
identification number is not on file with the Funds, (ii) those about whom
notification has been received (either by the shareholder or the Funds) from the
IRS that they are subject to backup withholding or (iii) those who, to the
Funds' knowledge, have furnished an incorrect taxpayer identification number.
Generally, to avoid backup withholding, an investor must, as the time an account
is opened, certify under penalties of perjury that the taxpayer identification
number furnished is correct and that he or she is not subject to backup
withholding.
Each Fund may invest in certain debt securities that are originally issued or
acquired at a discount. Special rules apply under the Code to the recognition of
income with respect to such debt securities. Under the special rules, each Fund
my recognize income for tax purposes without a corresponding current receipt of
cash. In addition, gain on a disposition of a dept security subject to the
special rules may be treated wholly or partially as ordinary income, not capital
gain.
The Funds intend to accrue dividend income for Federal income tax purposes in
accordance with the rules applicable to regulated investment companies. In some
cases, these rules may have the effect of accelerating (in comparison to other
recipients of the dividend) the time at which the dividend is taken into account
by the Funds as taxable income.
Transactions in options on stock indexes are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Funds
during a taxable year or held by the Funds at the close of its taxable year,
will be treated as if sold for their market value. Generally, 60% of any net
gain or loss recognized on the deemed sale, as well as 60% of the gain or loss
with respect to any actual termination (including expiration), will be treated
as long-term capital gain or loss and the remaining 40% will be treated as
short-term capital gain or loss.
The Funds may be subject to tax on dividend or interest income received from
securities of non-U.S. issuers withheld by a foreign country at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Funds to a reduced rate of tax or exemption from tax on income. It
is impossible to determine the effective rate of foreign tax in advance since
the amount of the Funds' assets to be invested within various countries is not
know. The Funds intend to operate so as to quality for treaty tax benefits where
applicable. To the extent that the Funds are liable for foreign income taxes
withheld at the source, the Funds may operate so as to meet the requirements of
the Code to "pass through" to the Funds' shareholders tax benefits attributable
to foreign income taxes paid by the Funds. If more than 50% of the value of the
Funds' total assets at the close of its taxable year is comprised of securities
issued by foreign corporations, the Funds may elect with the IRS to "pass
through" to the Funds' shareholders the amount of foreign income taxes paid by
the Funds. Pursuant to this election, shareholders will be required to (i)
include in gross income, even though not actually received, their respective pro
rata share of foreign taxes paid by the Funds; (ii) treat their pro rata share
of foreign taxes as paid by them; (iii) either deduct their pro rata share of
foreign taxes in computing their taxable income, or use such share as foreign
tax credit against U.S. income tax (but not both). No deduction for foreign
taxes may be claimed by a non-corporate shareholder who does not itemize
deductions. The Funds may meet the requirements to "pass through" to its
shareholders foreign income taxes paid, but there can be no assurance that the
Funds will be able to do so. Each shareholder will be notified within 60 days
after the close of each taxable year of the Funds if the foreign taxes paid by
the Funds will "pass through" for that year, and, if so, the amount of each
shareholder's pro rata share (by country) of (i) the foreign taxes paid and (ii)
the Funds' gross income from foreign sources. Shareholders who are not liable
for Federal income taxes will not be affected by such "pass through" of foreign
tax credits.
If the Funds invest in stocks of certain passive foreign investment
companies, the Funds may be subject to U.S. Federal income taxation on a portion
of the "excess distribution" with respect to, or gain from, the disposition of
such stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Funds' holding period for the stock. The distribution
or gain so allocated to any taxable year of the excess distribution or
disposition would be taxed to the Funds at the highest ordinary income rate in
effect for such year, and the tax would be further increased by an interest
charge to reflect the value of the tax deferral deemed to have resulted from
ownership of foreign company's stock. Any amount of distribution or gain
allocated to the taxable year of the distribution or disposition would be
included in the Funds' investment company taxable income and, accordingly, would
not be taxable to the Funds to the extent distributed by the Funds as a dividend
to its shareholder.
The foregoing is a general summary of the applicable provisions of the Code
and Treasury Regulations presently in effect. For the complete provisions,
reference should be made to the pertinent Code sections and the Treasury
Regulations promulgated thereunder. The Code and these Treasury Regulations are
subject to change by legislative or administrative action either prospectively
or retroactively. Distributions and the transactions referred to above may be
subject to state and local income tax, and the treatment thereof may differ from
the Federal tax treatment discussed herein. Shareholders are advised to consult
with their tax advisor or attorney.
17
<PAGE>
IMPORTANT NOTICE REGARDING TAXPAYER IRS CERTIFICATION
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of all
reportable payments including any taxable dividends, capital gains distributions
or share redemption proceeds, for an account which does not have a taxpayer
identification number or social security number and certain required
certifications. The Funds reserve the right to refuse to open an account for any
person failing to provide a taxpayer identification number along with the
required certifications.
Each Fund will furnish its shareholders, within 31 days after the end of the
calendar year, with information which is required by the Internal Revenue
Service for preparing income tax returns.
Investors are urged to consult their attorney or tax adviser regarding
specific questions as to federal, foreign, state or local taxes.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA,
401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement
Plans. Write or call Equity Planning (800) 243-4361 for further information
about the plans.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
THE DISTRIBUTOR
Phoenix Equity Planning Corporation (the "Equity Planning" or "Distributor"),
an indirect, less than wholly-owned subsidiary of Phoenix Home Life and an
affiliate of PIC, serves as Distributor for the Funds. The address of the
Distributor is 100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut
06083-2200. The Distributor conducts a continuous offering pursuant to a "best
efforts" arrangement requiring the Distributor to take and pay for only such
securities as may be sold to the public. During the fiscal years 1997, 1998 and
1999, purchasers of Fund shares paid aggregate sales charges of $699,467,
$262,562 and $136,500, respectively, of which the Distributor for the Funds
received net commissions of $125,818, $210,029 and $92,671, respectively, for
its services, the balance being paid to dealers. For the fiscal year ended July
31, 1999, the Distributor received net commissions of $3,008 for Class A Shares
and deferred sales charges of $89,663 for Class B Shares.
The Underwriting Agreement may be terminated at any time upon not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Trust, or by vote
of a majority of the Trustees who are not "interested persons" of the Trust and
who have no direct or indirect financial interest in the operation of the
Distribution Plans or in any related agreements. The Underwriting Agreement will
terminate automatically in the event of its assignment.
18
<PAGE>
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS A PERCENTAGE SALES CHARGE AS A PERCENTAGE DEALER DISCOUNT
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50 4.71 4.00
$100,000 but under $250,000 3.50 3.63 3.00
$250,000 but under $500,000 3.00 3.09 2.75
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares sold by such dealers. This sales commission will
not be paid to dealers for sales of Class B Shares purchased by 401(k)
participants of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the
CDSC for these Plan participants' purchases. Your broker, dealer or investment
adviser may also charge you additional commissions or fees for their services in
selling shares to you provided they notify the Distributor of their intention to
do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Fund and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the Fund
through distribution fees, service fees or transfer agent fees or in some cases,
the Distributor may pay certain fees from its own profits and resources. From
its own profits and resources, the Distributor does intend to: (a) sponsor
training and educational meetings and provide additional compensation to
qualifying dealers in the form of trips, merchandise or expense reimbursements;
(b) from time to time, pay special incentive and retention fees to qualified
wholesalers, registered financial institutions and third-party marketers; (c)
pay broker/dealers an amount equal to 1% of the first $3 million of Class A
Share purchases by an account held in the name of a qualified employee benefit
plan with at least 100 eligible employees, 0.50% on the next $3 million, plus
0.25% on the amount in excess of $6 million; and (d) excluding purchases as
described in (c) above, pay broker/dealers an amount equal to 1% of the amount
of Class A Shares sold above $1 million but under $3 million, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million. If part or all of
such investment, including investments by qualified employee benefit plans, is
subsequently redeemed within one year of the investment date, the broker/dealer
will refund to the Distributor such amounts paid with respect to the investment.
In addition, the Distributor may pay the entire applicable sales charge on
purchases of Class A Shares to selected dealers and agents. From its own profits
and resources, the Distributor intends to pay the following additional
compensation to Merrill Lynch, Pierce, Fenner & Smith, Inc.: 0.25% on sales of
Class A and B shares, 0.10% on sales of Class A shares sold at net asset value,
and 0.10% annually on the average daily net asset value of fund shares on which
Merrill Lynch is broker of record and which such shares exceed the amount of
assets on which Merrill Lynch is broker of record as of July 1, 1999. Any dealer
who receives more than 90% of a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933. Equity Planning reserves the
right to discontinue or alter such fee payment plans at any time.
SERVICES AS FINANCIAL AGENT
Equity Planning also acts as financial agent of the Trust and as such
performs bookkeeping and pricing functions for the Funds. For services as
financial agent, Equity Planning will be paid a fee equal to the sum of (1) the
documented cost of fund accounting and related services provided by PFPC, Inc.,
as subagent, to the financial agent, plus (2) the documented cost of the
financial agent to provide financial reporting and tax services and oversight of
the subagent's performance. The current fee schedule of PFPC, Inc. is based upon
the average of the aggregate daily net asset values of each Fund, at the
following incremental annual rates:
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of the
Funds. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as financial agent. PFPC,
Inc. agreed to a modified fee structure and waived certain
19
<PAGE>
charges. Because PFPC, Inc.'s arrangement would have favored smaller funds over
larger funds, Equity Planning reallocates PFPC, Inc.'s overall asset-based
charges among all funds for which it serves as financial agent on the basis of
the relative net assets of each fund. As a result, the PFPC, Inc. charges to the
Funds are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above. For its services
during the Trust's fiscal year ended July 31, 1999, Equity Planning received
$84,928.
DISTRIBUTION PLANS
The Trust has adopted separate amended and restated distribution plans under
Rule 12b-1 of the 1940 Act for each Class of Shares of each Fund of the Trust
(the "Class A Plan," the "Class B Plan," and collectively the "Plans"). The
Plans permit the Trust to reimburse the Distributor for expenses incurred in
connection with activities intended to promote the sale of shares of each Class
of Shares of the Trust and to pay the Distributor for providing shareholder
services.
Pursuant to the Plans, the Funds will pay the Distributor 0.25% annually of
the average daily net assets of the Funds for furnishing services to
shareholders (the "Service Fee") and will reimburse the Distributor for actual
expenses of the Distributor up to 0.75% of the average daily net assets of the
Funds' Class B Shares, respectively. Expenditures under the Plans shall consist
of: (i) commissions to sales personnel for selling shares of the Funds
(including underwriting fees and financing expenses incurred in connection with
the payment of commissions); (ii) compensation, sales incentives and payments to
sales, marketing and service personnel; (iii) payments to broker-dealers and
other financial institutions which have entered into agreements with the
Distributor in the form of the Dealer Agreement for Phoenix Funds for services
rendered in connection with the sale and distribution of shares of the Funds;
(iv) payment of expenses incurred in sales and promotional activities, including
advertising expenditures related to the Funds; (v) the costs of preparing and
distributing promotional materials; (vi) the cost of printing the Funds'
Prospectus and Statement of Additional Information for distribution to potential
investors; and (vii) such other similar services that the Trustees determine are
reasonably calculated to result in the sale of shares of the Funds.
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor.
From its own resources or pursuant to the Plan, and subject to the dealers'
prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals, and
lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or dealers'
achievement of a sales target. The Distributor may, from time to time, reallow
the entire portion of the sales charge on Class A shares which it normally
retains to individual selling dealers. However, such additional reallowance
generally will be made only when the selling dealer commits to substantial
marketing support such as internal wholesaling through dedicated personnel,
internal communications and mass mailings.
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor, such
as services to the Funds' shareholders; or services providing the Funds with
more efficient methods of offering shares to coherent groups of clients, members
or prospects of a participant; or services permitting bulking of purchases or
sales, or transmission of such purchases or sales by computerized tape or other
electronic equipment; or other processing.
The fee received by the Distributor under the early years of the Plans is not
likely to reimburse the Distributor for the total distribution expenses it will
actually incur as a result of the Funds having fewer assets and the Distributor
incurring greater promotional expenses during the start-up phase. If the Plans
are terminated in accordance with their terms, the obligations of the Funds to
make payments to the Distributor pursuant to the Plans will cease and the Funds
will not be required to make any payments past the date on which each Plan
terminates.
On a quarterly basis, the Trustees review a report on expenditures under the
Plans and the purposes for which expenditures were made. The Trustees conduct an
additional, more extensive review annually in determining whether the Plans will
be continued. By its terms, continuation of the Plans from year to year is
contingent on annual approval by a majority of the Trustees and by a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of the Plans
or any related agreements (the "Plan Trustees"). The Plans provide that they may
not be amended to increase materially the costs which the Funds may bear
pursuant to the Plans without approval of the shareholders of the Funds and that
other material amendments to the Plans must be approved by a
20
<PAGE>
majority of the Plan Trustees by vote cast in person at a meeting called for the
purpose of considering such amendments. The Plans further provide that while
they are in effect, the selection and nomination of Trustees who are not
"interested persons" shall be committed to the discretion of the Trustees who
are not "interested persons." The Plans may be terminated at any time by vote of
a majority of the Plan Trustees or a majority of the outstanding shares of the
relevant Class of the Trust.
For the fiscal year ended July 31, 1999, the Funds paid Rule 12b-1 Fees in
the amount of $175,119, of which the principal underwriter received $122,370,
W.S. Griffith & Co., Inc., an affiliate, received $8,158 and unaffiliated
broker-dealers received $44,591. 12b-1 Fees paid by the Funds during last fiscal
year were spent on: (1) advertising, $226,513; (2) printing and mailing of
prospectuses to other than current shareholders, $15,134; (3) compensation to
dealers, $81,238; (4) compensation to sales personnel, $356,533; (5) service
costs, $150,895 and (6) other, $87,443. The Distributor's expenses from selling
and servicing Class B Shares may be more than the payments received from
contingent deferred sales charges collected on redeemed shares and from the Fund
under the Class B Plan. Those expenses may be carried over and paid in future
years. At December 31, 1998, the end of the last Plan year, the Distributor had
incurred unreimbursed expenses under the Class B Plan of $1,332,140 (equal to
3.9% of the Fund's net assets) which have been carried over into the present
Class B Plan year.
No interested person of the Fund and no Director who is not an interested
person of the Fund, as that term is defined in the Investment Company Act of
1940, had any direct or indirect financial interest in the operation of the
Plans.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
MANAGEMENT OF THE TRUST
The Trust is an open-end management investment company known as a mutual
fund. The Trustees of the Trust ("Trustees") are responsible for the overall
supervision of the Trust and perform duties imposed on Trustees by the
Investment Company Act and Massachusetts business trust law.
TRUSTEES AND OFFICERS
The following table sets forth information concerning the Trustees and
executive officers of the Funds, including their principal occupations during
the past five years. Unless otherwise noted, the address of each Trustee and
executive officer is 56 Prospect Street, Hartford, Connecticut 06115.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Robert Chesek (65) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff &
Wethersfield, CT 06109 Phelps Institutional Mutual Funds (1996-present). Vice President,
Common Stock, Phoenix Home Life Mutual Insurance Company (1980-1994).
E. Virgil Conway (70) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation
(1987-present) (Chairman, 1998-present), Accuhealth (1994-present),
Trism, Inc. (1994-present), Realty Foundation of New York
(1972-present), New York Housing Partnership Development Corp.
(Chairman) (1981-present) and Academy of Political Science (Vice
Chairman) (1985-present). Director/Trustee, Phoenix Funds
(1993-present). Trustee, Phoenix-Aberdeen Series Fund and Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present). Director,
Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director and
Chairman/Member, Audit Committee of the City of New York (1981-1996).
Advisory Director, Blackrock Fannie Mae Mortgage Securities Fund
(1989-1996) and Fund Directions (1993-1998). Chairman, Financial
Accounting Standards Advisory Council (1992-1995).
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Harry Dalzell-Payne (70) Trustee Director/Trustee, Phoenix Funds (1983-present). Trustee,
330 East 39th Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Apartment 29G Mutual Funds (1996-present). Director, Duff & Phelps Utilities
New York, NY 10022 Tax-Free Income Inc. and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1995-present). Director, Farragut Mortgage Co., Inc.
(1991-1994). Formerly a Major General of the British Army.
*Francis E. Jeffries (69) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
6585 Nicholas Blvd. Phoenix-Aberdeen Series Inc. and Phoenix Duff & Phelps Institutional
Apt. 1601 Mutual Funds (1996-present). Director, Duff & Phelps Utilities Income
Naples, FL 33963 Inc. (1987-present), Duff & Phelps Utilities Tax-Free Income Inc.
(1991-present) and Duff & Phelps Utility and Corporate Bond Trust
Inc. (1993-present). Director, The Empire District Electric Company
(1984-present). Director (1989-1997), Chairman of the Board
(1993-1997), President (1989-1993), and Chief Executive Officer
(1989-1995), Phoenix Investment Partners, Ltd.
Leroy Keith, Jr. (60) Trustee Chairman and Chief Executive Officer, Carson Products Company
Chairman and Chief (1995-present). Director/Trustee, Phoenix Funds (1980-present).
Executive Officer Trustee, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Carson Product Company Institutional Mutual Funds (1996-present). Director, Equifax Corp.
64 Ross Road (1991-present) and Evergreen International Fund, Inc. (1989-present).
Savannah, GA 30750 Trustee, Evergreen Liquid Trust, Evergreen Tax Exempt Trust,
Evergreen Tax Free Fund, Master Reserves Tax Free Trust, and Master
Reserves Trust. President, Morehouse College (1987-1994). Chairman
and Chief Executive Officer, Keith Ventures (1992-1994).
*Philip R. McLoughlin (53) Trustee and President Chairman (1997-present), Vice Chairman (1995-1997) and Chief
Executive Officer (1995-present), Phoenix Investment Partners, Ltd.
Director (1994-present) and Executive Vice President, Investments
(1988-present), Phoenix Home Life Mutual Insurance Company.
Director/Trustee and President, Phoenix Funds (1989-present). Trustee
and President, Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present). Director, Duff & Phelps
Utilities Tax-Free Income Inc. (1995-present) and Duff & Phelps
Utility and Corporate Bond Trust Inc. (1995-present). Director
(1983-present) and Chairman (1995-present), Phoenix Investment
Counsel, Inc. Director (1984-present) and President (1990-present),
Phoenix Equity Planning Corporation. Director, Phoenix Realty Group,
Inc. (1994-present), Phoenix Realty Advisors, Inc. (1987-present),
Phoenix Realty Investors, Inc. (1994-present), Phoenix Realty
Securities, Inc. (1994-present), PXRE Corporation (Delaware)
(1985-present), and World Trust Fund (1991-present). Director and
Executive Vice President, Phoenix Life and Annuity Company
(1996-present). Director and Executive Vice President, PHL Variable
Insurance Company (1995-present). Director, Phoenix Charter Oak Trust
Company (1996-present). Director and Vice President, PM Holdings, Inc.
(1985-present). Director (1992-present) and President (1992-1994), W.S.
Griffith & Co., Inc. Director, PHL Associates, Inc. (1995-present).
Everett L. Morris (71) Trustee Vice President, W.H. Reaves and Company (1993-present). Director/
164 Laird Road Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
Colts Neck, N.J. 07722 Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
(1996-present). Director, Duff & Phelps Utilities Tax-Free Income
Inc. (1991-present) and Duff & Phelps Utility and Corporate Bond
Trust Inc. (1993-present).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
*James M. Oates (53) Trustee Chairman, IBEX Capital Markets, Inc. (formerly IBEX Capital Markets
Managing Director LLC) (1997-present). Managing Director, Wydown Group (1994-present).
The Wydown Group Director, Phoenix Investment Partners, Ltd. (1995-present).
IBEX Capital Market, Inc. Director/Trustee, Phoenix Funds (1987-present). Trustee,
60 State Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Suite 950 Mutual Funds (1996-present). Director, AIB Govett Funds
Boston, MA 02109 (1991-present), Blue Cross and Blue Shield of New Hampshire
(1994-present), Investors Financial Service Corporation
(1995-present), Investors Bank & Trust Corporation (1995-present),
Plymouth Rubber Co. (1995-present), Stifel Financial (1996-present),
Command Systems, Inc. (1998-present) and Connecticut River Bancorp
(1998-present). Vice Chairman, Massachusetts Housing-Partnership
(1998-present). Member, Chief Executives Organization (1996-present).
Director (1984-1994), President (1984-1994) and Chief Executive
Officer (1986-1994), Neworld Bank.
*Calvin J. Pedersen (57) Trustee Director (1986-present), President (1993-present) and Executive Vice
Phoenix Investment President (1992-1993), Phoenix Investment Partners, Ltd. Director/
Partners, Ltd. Trustee, Phoenix Funds (1995-present). Trustee, Phoenix-Aberdeen
55 East Monroe Street Series Fund and Phoenix Duff & Phelps Institutional Mutual Funds
Suite 3600 (1996-present). President and Chief Executive Officer, Duff & Phelps
Chicago, IL 60603 Utilities Tax-Free Income Inc. (1995-present), Duff & Phelps
Utilities Income Inc. (1994-present) and Duff & Phelps Utility and
Corporate Bond Trust Inc. (1995-present).
Herbert Roth, Jr. (71) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
P.O. Box 909 Mutual Funds (1996-present). Director, Boston Edison Company
Sherborn, MA 01770 (1978-present), Landauer, Inc. (medical services) (1970-present),
Tech Ops./Sevcon, Inc. (electronic controllers) (1987-present), and
Mark IV Industries (diversified manufacturer) (1985-present). Member,
Directors Advisory Council, Phoenix Home Life Mutual Insurance
Company (1998-present). Director, Phoenix Home Life Mutual Insurance
Company (1972-1998) and Key Energy Group (oil rig service)
(1988-1994).
Richard E. Segerson (53) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 06840 Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present). Managing Director, Mullin Associates
(1993-1998).
Lowell P. Weicker, Jr. (68) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund and Phoenix Duff & Phelps Institutional
Greenwich, CT 06830 Mutual Funds (1996-present). Director, UST Inc. (1995-present), HPSC
Inc. (1995-present), and Compuware (1996-present) and Burroughs
Wellcome Fund (1996-present). Visiting Professor, University of
Virginia (1997-present). Director, Duty Free International, Inc.
(1997). Chairman, Dresing, Lierman, Weicker (1995-1996). Governor of
the State of Connecticut (1991-1995).
Michael E. Haylon (41) Executive Director and Executive Vice President--Investments, Phoenix Investment
Vice Partners, Ltd. (1995-present). Executive Vice President, Phoenix
President Funds (1993-present) and Phoenix-Aberdeen Series Fund (1996-present).
Executive Vice President (1997-present), Vice President (1996-1997),
Phoenix Duff & Phelps Institutional Mutual Funds. Director
(1994-present), President (1995-present), Executive Vice President
(1994-1995), Vice President (1991-1994), Phoenix Investment Counsel,
Inc. Director, Phoenix Equity Planning Corporation (1995-present).
Senior Vice President, Securities Investments, Phoenix Home Life
Mutual Insurance Company (1993-1995).
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
John F. Sharry (47) Executive President, Retail Division (1999-present), Executive Vice President,
Vice Retail Division (1997-1999), Phoenix Investment Partners, Ltd.
President Managing Director, Retail, Phoenix Equity Planning Corporation
(1995-present). Executive Vice President, Phoenix Funds and
Phoenix-Aberdeen Series Fund (1998-present). Managing Director,
Director and National Sales Manager (December 1993-November 1995),
Senior Vice President, Director and National Sales Manager (December
1992-December 1993), Putnam Funds.
Chong Yoon Chou (31) Senior Investment Manager, Aberdeen Asset Management ( 1994-present).
Aberdeen Asset Management Vice President Director, Aberdeen Asset Management Asia Limited (1998-present).
Asia Limited
88A Circular Road
Singapore 049439
Christopher D. Fishwick (38) Senior Investment Director, Aberdeen Asset Managers, LTD (1991-present).
Aberdeen Asset Vice Director, Phoenix-Aberdeen International Advisors LLC (1996-present).
Managers, LTD President
10 Queens Terrace
Aberdeen, Scotland
Peter Hames (38) Senior Far East Investment Director, Aberdeen Asset Management Asia Limited
Aberdeen Asset Management Vice (1992-present).
Asia Limited President
88A Circular Road
Singapore 049439
Hugh Young (41) Senior Director, Aberdeen Asset Management Limited (1988-present). Far East
Aberdeen Asset Vice Investment Director, Aberdeen Asset Management Asia Limited
Management President (1992-present). Managing Director, Aberdeen Asset Management Asia
Asia Limited Limited (1992-present). Director, Phoenix-Aberdeen International
88A Circular Road Advisors LLC (1996-present). Far East Investment Director, Phoenix
Singapore 049439 Investment Counsel, Inc. (1996-present). Senior Vice President, The
Phoenix Edge Series Fund (1996-present). Director, Abtrust
Asian Smaller Companies Investment Trust plc (1995-present),
Abtrust New Dawn Investment Trust plc (1989-present), Abtrust
New Thai Investment Trust plc (1989-present), Abtrust Emerging
Asia Investment Trust Limited (1990-present), JF Philippine
Fund Inc. (1991-present) and Apollo Tiger Fund (1994-present).
Shahreza Yusof (27) Senior Investment Manager, Aberdeen Asset Management Asia Limited
Aberdeen Asset Management Vice (1994-present).
Asia Limited President
88A Circular Road
Singapore 049439
Christian C. Bertelsen (56) Vice Managing Director, Value Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. President (1997-present). Managing Director, National Securities and Research
San Francisco, CA 94133 Corporation (1998-present). Vice President, Phoenix Investment Trust
97 (1997-present), Phoenix-Aberdeen Series Fund (1998-present) and
The Phoenix Edge Series Fund (1998-present). Senior Vice
President and Chief Investment Officer, Zurich Kemper
(1996-1997). Vice President and Portfolio Manager, Zurich Kemper Small
Cap Fund and Zurich Kemper Contrarian Fund (1996-1997). Senior Vice
President, Eagle Asset Management (1993-1996). Vice President and
Portfolio Manager, Heritage Value Fund and Golden Select Variable
Annuity Value Trust (1995-1996).
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
William R. Moyer (55) Vice Executive Vice President and Chief Financial Officer (1999-present),
100 Bright Meadow Blvd. President Senior Vice President and Chief Financial Officer, Phoenix Investment
P.O. Box 2200 Partners, Ltd. (1995-1999). Director (1998-present), Senior Vice
Enfield, CT 06083-2200 President, Finance (1990-present), Chief Financial Officer
(1996-present), and Treasurer (1994-1996 and 1998-present), Phoenix
Equity Planning Corporation. Director (1998-present), Senior Vice
President (1990-present), Chief Financial Officer (1996-present) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc. Senior
Vice President and Chief Financial Officer, Duff & Phelps Investment
Management Co. (1996-present). Vice President, Phoenix Funds
(1990-present), Phoenix-Duff & Phelps Institutional Mutual Funds
(1996-present), Phoenix-Aberdeen Series Fund (1996-present). Senior
Vice President and Chief Financial Officer, W. S. Griffith & Co.,
Inc. (1992-1995) and Townsend Financial Advisers, Inc. (1993-1995).
Vice President, Investment Products Finance, Phoenix Home Life Mutual
Insurance Company (1990-1995).
Leonard J. Saltiel (45) Vice Managing Director, Operations and Service, (1996-present), Senior
President Vice President (1994-1996), Phoenix Equity Planning Corporation. Vice
President, Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), and Phoenix-Aberdeen
Series Fund (1996-present). Senior Vice President, Phoenix Investment
Partners, Ltd. (1999-present). Vice President, Investment Operations,
Phoenix Home Life Mutual Insurance Company (1994-1995). Various
positions with Home Life Insurance Company and Phoenix Home Life
Mutual Insurance Company (1987-1994).
Julie L. Sapia (42) Vice Director, Money Market Trading (1998-present), Head Money Market Trader
President (1997), Money Market Trader (1995-1997), Phoenix Investment Counsel,
Inc. Vice President (1997-present), The Phoenix Edge Series Fund,
Phoenix Series Fund, Phoenix Duff & Phelps Institutional Mutual Funds,
and Phoenix-Aberdeen Series Fund. Various positions with Phoenix Home
Life Mutual Insurance Company (1985-1995).
Nancy G. Curtiss (47) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present), Phoenix-Aberdeen Series Fund
(1996-present). Second Vice President and Treasurer, Fund Accounting,
Phoenix Home Life Mutual Insurance Company (1994-1995). Various
positions with Phoenix Home Life Insurance Company (1987-1994).
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life Mutual Insurance
101 Munson Street Co. (1993-present). Vice President, Mutual Fund Customer Service
Greenfield, MA 01301 (1996-present), Vice President, Transfer Agency Operations 1993-1996),
Phoenix Equity Planning Corporation. Clerk, Phoenix Investment Counsel,
Inc. (1995-present). Secretary/Clerk, Phoenix Funds (1993-present),
Phoenix Duff & Phelps Institutional Mutual Funds (1996-present) and
Phoenix-Aberdeen Series Fund (1996-present).
</TABLE>
- ----------
* Indicates that the Trustee is an "interested person" of the Fund within the
meaning of the definition set forth in Section 2(a)(19) of the 1940 Act.
For services rendered to the Trust during the fiscal year ended July 31,
1999, the Trustees received an aggregate of $32,100 from the Trust as Trustees'
fees. For services on the Board of Trustees of the Phoenix Funds, each Trustee
who is not a full-time employee of the Adviser or any of its affiliates
currently receives a retainer at the annual rate of $40,000 and a fee of $2,500
per joint meeting of the Boards. Each Trustee who serves on the Audit Committee
receives a retainer at the annual rate of $2,000 and a fee of $2,000 per joint
Audit Committee meeting attended. Each Trustee who serves on the Nominating
Committee receives an annual retainer at the annual rate of $1,000 and a fee of
$1,000 per joint Nominating Committee meeting attended. Each Trustee who serves
on the Executive Committee and who is not an interested person of the Funds
receives a retainer at the
25
<PAGE>
annual rate of $2,000 and $2,000 per joint Executive Committee meeting attended.
The function of the Executive Committee is to serve as a contract review,
compliance review and performance review delegate of the full Board of Trustees.
Costs are allocated equally to each of the series of the funds within the Fund
Complex (which includes the Trust). The foregoing fees do not include the
reimbursement of expenses incurred in connection with meeting attendance.
Officers and employees of the Adviser who are interested persons are compensated
for their services by the Adviser and receive no compensation from the Trust.
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
TOTAL
PENSION OR ESTIMATED COMPENSATION
RETIREMENT ANNUAL FROM FUND AND
AGGREGATE BENEFITS BENEFITS FUND COMPLEX
COMPENSATION ACCRUED AS PART UPON (14 FUNDS)
NAME FROM FUND OF FUND EXPENSES RETIREMENT PAID TO TRUSTEES
- ---- --------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
Robert Chesek $2,900 $64,000
E. Virgil Conway[dagger] $3,650 $80,750
Harry Dalzell-Payne[dagger] $3,300 $92,750
Francis E. Jeffries $2,750* $61,000
Leroy Keith, Jr. $2,900 None None $64,000
Philip R. McLoughlin[dagger] $0 for any for any $0
Everett L. Morris[dagger] $3,150 Trustee Trustee $70,750
James M. Oates[dagger] $3,150 $69,750
Calvin J. Pedersen $0 $0
Herbert Roth, Jr.[dagger] $3,800 $82,750
Richard E. Segerson $3,250* $72,000
Lowell Weicker, Jr. $3,250 $71,000
</TABLE>
* This compensation (and the earnings thereon) will be deferred pursuant to the
Deferred Compensation Plan. At September 30, 1999, the total amount of
deferred compensation (including interest and other accumulation earned on
the original amounts deferred) accrued for Messrs. Jeffries, Morris, Roth and
Segerson was $241,931.17, $153,651.87, $152,500.93 and $55,754.32,
respectively. At present, by agreement among the Fund, the Distributor and
the electing director, director fees that are deferred are paid by the Fund
to the Distributor. The liability for the deferred compensation obligation
appears only as a liability of the Distributor.
[dagger] Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are
members of the Executive Committee.
As of November 6, 1999, the Trustees and officers of the Funds beneficially
owned less than 1% of the outstanding shares of the Trust.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of November 6, 1999 with
respect to each person who owns of record or is known by the Trust to own of
record or beneficially owns 5% or more of any Class of the Trust's equity
securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS NUMBER OF SHARES PERCENT OF CLASS
- ------------------- -------------- ---------------- ----------------
<S> <C> <C> <C>
Phoenix Home Life Global Small Cap Fund Class A 588,481.3600 39.86%
56 Prospect St New Asia Fund Class A 309,003.3550 26.66%
Hartford CT 06103-2818
Merrill Lynch Pierce Global Small Cap Fund Class B 80,138.6850 9.25%
Fenner & Smith New Asia Fund Class B 23,120.7700 5.38%
4800 Deer Lake Dr E 3rd Fl
Jacksonville FL 32246-6484
Prudential Securities Inc. FBO New Asia Fund Class B 41,595.3530 9.68%
Spitzer Management
150 E Bridge St
Elyria OH 44035-5219
Prudential Securities Inc. FBO New Asia Fund Class B 21,764.8820 5.07%
Buckeye American Inc.
150 E Bridge St
Elyria OH 44035-5219
</TABLE>
26
<PAGE>
CAPITAL STOCK
The Trust was established on May 31, 1996 as a Massachusetts business trust.
The capitalization of the Trust consists solely of an unlimited number of shares
of beneficial interest. The Trust currently offers shares in two funds and
different classes of those Funds. Holders of shares of a Fund have equal rights
with regard to voting, redemptions, dividends, distributions, and liquidations
with respect to that Fund, except that Class B Shares of any Fund, which bear
higher distribution and services fees and certain incrementally higher expenses
associated with the deferred sales arrangement, pay correspondingly lower
dividends per share than Class A Shares of the same Fund. Shareholders of all
Funds vote on the election of Trustees. On matters affecting an individual Fund
(such as approval of an investment advisory agreement or a change in fundamental
investment policies) and on matters affecting an individual class (such as
approval of matters relating to a Distribution Plan for a particular class of
shares), a separate vote of that Fund or class is required. Trustees will call a
meeting when at least 10% of the outstanding shares so request in writing. If
the Trustees fail to call a meeting after being so notified, the Shareholders
may call the meeting. The Trustees will assist the Shareholders by identifying
other shareholders or mailing communications, as required under Section 16(c) of
the Investment Company Act of 1940.
Shares are fully paid, nonassessable, redeemable and fully transferable when
they are issued. Shares do not have cumulative voting rights, preemptive rights
or subscription rights. The assets received by the Trust for the issue or sale
of shares of each Fund, and any class thereof and all income, earnings, profits
and proceeds thereof, are allocated to such Fund, and Class, respectively,
subject only to the rights of creditors, and constitute the underlying assets of
such Fund or class. The underlying assets of each Fund are required to be
segregated on the books of account, and are to be charged with the expenses in
respect to such Fund and with a share of the general expenses of the Trust. Any
general expenses of the Trust not readily identifiable as belonging to a
particular Fund or Class will be allocated by or under the direction of the
Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Trust itself would be unable to meet its
obligations.
ADDITIONAL INFORMATION
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, has been
selected as the independent accountants for the Trust. PricewaterhouseCoopers
LLP audits the Trust's annual financial statements and expresses an opinion
thereon.
CUSTODIAN AND TRANSFER AGENT
Brown Brothers Harriman & Co., 40 Water Street, Boston, MA 02109, serves as
custodian of the Trust's assets (the "Custodian"). Phoenix Equity Planning
Corporation, 100 Bright Meadow Boulevard, Enfield, CT 06082, serves as Transfer
Agent for the Funds (the "Transfer Agent"). As compensation, Equity Planning
receives a fee equivalent to $17.95 for each designated non-daily dividend
shareholder account, plus out-of-pocket expenses. Transfer Agent fees are also
utilized to offset costs and fees paid to subtransfer agents employed by Equity
Planning. State Street Bank and Trust Company serves as a subtransfer agent
pursuant to a Subtransfer Agency Agreement.
REPORT TO SHAREHOLDERS
The fiscal year of the Trust ends on July 31. The Trust will send financial
statements to its shareholders at least semiannually. An annual report
containing financial statements, audited by the Trust's independent accountants,
will be sent to shareholders each year.
FINANCIAL STATEMENTS
The Financial Statements for the Funds' fiscal year ended July 31, 1999,
appearing in the Funds' 1999 Annual Report to Shareholders, are incorporated
herein by reference.
27
<PAGE>
PHOENIX-ABERDEEN NEW ASIA FUND
INVESTMENTS AT JULY 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--98.3%
AUSTRALIA--13.8%
Australian Gas Light Co., Ltd. (Natural
Gas).................................... 40,000 $ 257,288
BRL Hardy Ltd. (Beverages
(Alcoholic))............................ 100,000 400,951
Commonwealth Bank of Australia (Banks
(Major Regional))....................... 13,000 204,759
Leighton Holdings Ltd. (Engineering &
Construction)........................... 60,000 228,346
Pacifica Group Ltd. (Auto Parts &
Equipment).............................. 50,000 220,392
QBE Insurance Group Ltd. (Insurance
(Property-Casualty)).................... 110,000 414,468
--------------
1,726,204
--------------
HONG KONG--21.5%
Axa China Region Ltd. (Insurance
(Life/Health)).......................... 400,000 265,413
CDL Hotels International Ltd.
(Lodging-Hotels)........................ 600,000 231,915
Giordano International Ltd. (Retail
(Specialty-Apparel)).................... 799,000 684,580
Hongkong Electric Holdings Ltd.
(Electric Companies).................... 55,000 173,968
Johnson Electric Holdings Ltd.
(Manufacturing (Diversified))........... 65,000 269,665
Li & Fung Ltd. (Distributors (Food &
Health))................................ 110,000 307,544
Pacific Century Insurance Holdings
(Insurance (Property-Casualty))(b)...... 270,000 201,766
Smartone Telecommunications
(Telecommunications
(Cellular/Wireless)).................... 60,000 199,833
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
HONG KONG--CONTINUED
Swire Pacific Ltd. Class B
(Manufacturing (Diversified))........... 500,000 $ 363,977
--------------
2,698,661
--------------
INDIA--8.3%
BSES Ltd. GDR (Electric Companies)...... 22,000 272,250
ICICI Ltd. Sponsored GDR (Financial
(Diversified)).......................... 25,000 265,625
Mahanagar Telephone Nigam Ltd. Sponsored
GDR (Telecommunications (Long
Distance)).............................. 28,000 296,100
Ranbaxy Laboratories Ltd. GDR (Health
Care (Drugs-Major Pharmaceuticals))..... 10,000 210,000
--------------
1,043,975
--------------
INDONESIA--2.9%
PT Indosat (Telecommunications (Long
Distance)).............................. 220,000 366,812
MALAYSIA--5.5%
Carlsberg Brewery Malaysia Berhad
(Beverages (Alcoholic))(c).............. 75,000 191,943
Malaysian Oxygen Berhad (Chemicals
(Specialty))(c)......................... 95,000 191,351
Sime UEP Properties Berhad (Financial
(Diversified))(c)....................... 271,000 312,100
--------------
695,394
--------------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Phoenix-Aberdeen New Asia Fund
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
NEW ZEALAND--2.4%
Telecom Corporation of New Zealand Ltd.
(Telephone)............................. 65,000 $ 294,032
PHILIPPINES--7.7%
Ayala Land, Inc. (Financial
(Diversified)).......................... 850,000 242,864
Bank of The Philippine Islands (Banks
(Major Regional))....................... 80,000 241,046
La Tondena Distillers, Inc. (Beverages
(Alcoholic))............................ 225,000 254,228
Philippine Long Distance Telephone Co.
Sponsored ADR (Telecommunications (Long
Distance)).............................. 8,000 233,500
--------------
971,638
--------------
SINGAPORE--9.0%
Clipsal Industries (Holdings) Ltd.
(Electrical Equipment).................. 150,000 214,500
Robinson & Co. Ltd. (Retail (Department
Stores))................................ 100,000 320,804
Singapore Press Holdings Ltd.
(Publishing (Newspapers))............... 9,000 159,333
United Overseas Bank Ltd. (Banks (Major
Regional)).............................. 60,000 438,432
--------------
1,133,069
--------------
SOUTH KOREA--12.2%
Kookmin Bank (Banks (Major Regional))... 20,000 302,460
Korea Telecom Corp. (Telephone)......... 6,000 421,284
Pohang Iron & Steel Co. Ltd. (Iron &
Steel).................................. 5,000 624,116
Seoul City Gas Co. Ltd. (Natural Gas)... 6,000 181,975
--------------
1,529,835
--------------
SRI LANKA--2.6%
John Keells Holdings Ltd. (Beverages
(Alcoholic))............................ 60,000 159,345
National Development Bank Ltd. (Banks
(Major Regional))....................... 100,000 170,527
--------------
329,872
--------------
TAIWAN--1.5%
Standard Foods Taiwan Ltd. GDR
(Foods)(b).............................. 30,864 189,814
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
THAILAND--6.3%
BEC World Public Co. Ltd.
(Entertainment)......................... 35,000 $ 205,086
Hana Microelectronics Public Co., Ltd.
(Electronics (Component
Distributors))(b)....................... 49,100 142,534
Phatra Insurance Public Co. Ltd. Foreign
(Insurance (Property-Casualty))......... 73,700 179,278
Ruam Pattana Fund II (Financial
(Diversified))(b)....................... 1,500,000 262,069
--------------
788,967
--------------
UNITED KINGDOM--4.6%
HSBC Holdings PLC (Financial
(Diversified)).......................... 30,000 353,670
Rowe Evans Investments Group PLC
(Agricultural Products)................. 200,000 218,701
--------------
572,371
--------------
- - ---------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $12,784,747) 12,340,644
- - ---------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--98.3%
(IDENTIFIED COST $12,784,747) 12,340,644
- - ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--1.6%
COMMERCIAL PAPER--1.6%
General Re Corp. 5.15%, 8/2/99.......... A-1+ $ 200 199,971
- - -------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $199,971) 199,971
- - -------------------------------------------------------------------------------------
TOTAL INVESTMENTS--99.9%
(IDENTIFIED COST $12,984,718) 12,540,615(a)
Cash and receivables, less liabilities--0.1% 7,847
--------------
NET ASSETS--100.0% $ 12,548,462
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $2,230,961 and gross
depreciation of $2,732,402 for federal income tax purposes. At July 31,
1999, the aggregate cost of securities for federal income tax purposes was
$13,042,056.
(b) Non-income producing.
(c) Security valued at fair value as determined in good faith by or under the
direction of the Trustees.
See Notes to Financial Statements
8
<PAGE>
Phoenix-Aberdeen New Asia Fund
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF TOTAL VALUE OF
TOTAL LONG-TERM INVESTMENTS
(UNAUDITED)
<TABLE>
<S> <C>
Agricultural Products................... 1.7%
Auto Parts & Equipment.................. 1.8
Banks (Major Regional).................. 11.0
Beverages (Alcoholic)................... 8.1
Chemicals (Specialty)................... 1.6
Distributors (Food & Health)............ 2.5
Electric Companies...................... 3.6
Electrical Equipment.................... 1.7
Electronics (Component Distributors).... 1.2
Engineering & Construction.............. 1.9
Entertainment........................... 1.7
Financial (Diversified)................. 11.6
Foods................................... 1.5
Health Care (Drugs-Major
Pharmaceuticals)...................... 1.7
Insurance (Life/Health)................. 2.2
Insurance (Property-Casualty)........... 6.4
Iron & Steel............................ 5.1
Lodging-Hotels.......................... 1.9
Manufacturing (Diversified)............. 5.1
Natural Gas............................. 3.6
Publishing (Newspapers)................. 1.3
Retail (Department Stores).............. 2.6
Retail (Specialty-Apparel).............. 5.5
Telecommunications
(Cellular/Wireless)................... 1.6
Telecommunications (Long Distance)...... 7.3
Telephone............................... 5.8
------
100.0%
------
------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Aberdeen New Asia Fund
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $12,984,718) $ 12,540,615
Cash 1,868
Foreign currency at value
(Identified cost $32,156) 34,640
Receivables
Dividends and interest 36,952
Receivable from adviser 15,888
Fund shares sold 4,901
Prepaid expenses 203
--------------
Total assets 12,635,067
--------------
LIABILITIES
Payables
Transfer agent fee 10,563
Financial agent fee 7,252
Trustees' fee 6,557
Distribution fee 5,043
Administration fee 1,654
Accrued expenses 55,536
--------------
Total liabilities 86,605
--------------
NET ASSETS $ 12,548,462
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 16,460,366
Distributions in excess of net investment income (49,284)
Accumulated net realized loss (3,420,991)
Net unrealized depreciation (441,629)
--------------
NET ASSETS $ 12,548,462
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $9,067,515) 1,102,404
Net asset value per share $8.23
Offering price per share $8.23/(1-4.75%) $8.64
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $3,480,947) 428,272
Net asset value and offering price per share $8.13
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 308,190
Interest 16,688
Foreign taxes withheld (14,067)
-----------
Total investment income 310,811
-----------
EXPENSES
Investment advisory fee 84,293
Distribution fee, Class A 17,630
Distribution fee, Class B 28,648
Financial agent fee 34,355
Transfer agent 55,099
Custodian 37,298
Professional 31,957
Printing 16,485
Administration fee 14,812
Trustees 14,272
Registration 1,943
Miscellaneous 2,077
-----------
Total expenses 338,869
Less expenses borne by investment adviser (109,130)
-----------
Net expenses 229,739
-----------
NET INVESTMENT INCOME 81,072
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (619,521)
Net realized gain on foreign currency transactions 2,144
Net change in unrealized appreciation (depreciation) on investments 4,769,904
Net change in unrealized appreciation (depreciation) on foreign
currency and foreign currency transactions 3,242
-----------
NET GAIN ON INVESTMENTS 4,155,769
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 4,236,841
-----------
-----------
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Phoenix-Aberdeen New Asia Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
7/31/99 7/31/98
------------ -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 81,072 $ 84,661
Net realized gain (loss) (617,377) (2,539,602)
Net change in unrealized appreciation
(depreciation) 4,773,146 (5,878,425)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 4,236,841 (8,333,366)
------------ -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (7,556) (119,514)
Net investment income, Class B (1,990) (43,580)
In excess of net investment income,
Class A (65,904) (239,479)
In excess of net investment income,
Class B (17,358) (87,326)
------------ -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (92,808) (489,899)
------------ -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,223,989 and 568,922 shares,
respectively) 8,368,949 3,994,745
Net asset value of shares issued from
reinvestment of distributions
(11,699 and
54,456 shares, respectively) 71,364 341,985
Cost of shares repurchased (1,299,843
and 735,511 shares, respectively) (8,708,720) (5,284,710)
------------ -------------
Total (268,407) (947,980)
------------ -------------
CLASS B
Proceeds from sales of shares (81,037
and 146,419 shares, respectively) 538,924 1,054,677
Net asset value of shares issued from
reinvestment of distributions (2,871
and
18,909 shares, respectively) 17,372 118,368
Cost of shares repurchased (165,810
and 272,894 shares, respectively) (991,898) (2,064,578)
------------ -------------
Total (435,602) (891,533)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (704,009) (1,839,513)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS 3,440,024 (10,662,778)
NET ASSETS
Beginning of period 9,108,438 19,771,216
------------ -------------
END OF PERIOD [INCLUDING DISTRIBUTIONS
IN EXCESS OF NET INVESTMENT INCOME
OF ($49,284) AND ($71,526),
RESPECTIVELY] $ 12,548,462 $ 9,108,438
------------ -------------
------------ -------------
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Phoenix-Aberdeen New Asia Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------
FROM
YEAR ENDED JULY 31, INCEPTION
--------------------------- 9/4/96 TO
1999 1998 7/31/97
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 5.45 $ 10.44 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.07(4)(5) 0.06(4)(5) 0.09(4)(5)(7)
Net realized and unrealized gain
(loss) 2.78 (4.75) 0.41
--- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 2.85 (4.69) 0.50
--- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (0.01) (0.10) (0.06)
In excess of net investment income (0.06) (0.20) --
--- ----- -----
TOTAL DISTRIBUTIONS (0.07) (0.30) (0.06)
--- ----- -----
Change in net asset value 2.78 (4.99) 0.44
--- ----- -----
NET ASSET VALUE, END OF PERIOD $ 8.23 $ 5.45 $ 10.44
--- ----- -----
--- ----- -----
Total return(1) 52.94% (45.29)% 4.98%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $9,068 $6,352 $13,355
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.10% 2.10% 2.10%(2)
Net investment income 1.03% 0.89% 0.95%(2)
Portfolio turnover 38% 44% 9%(3)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
FROM
YEAR ENDED JULY 31, INCEPTION
--------------------------- 9/4/96 TO
1999 1998 7/31/97
---------- ---------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 5.40 $ 10.39 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.02(4)(6) 0.01(4)(6) 0.01(4)(6)(7)
Net realized and unrealized gain
(loss) 2.75 (4.73) 0.43
----- ---------- -----
TOTAL FROM INVESTMENT
OPERATIONS 2.77 (4.72) 0.44
----- ---------- -----
LESS DISTRIBUTIONS
Dividends from net investment
income -- (0.09) (0.05)
In excess of net investment income (0.04) (0.18) --
----- ---------- -----
TOTAL DISTRIBUTIONS (0.04) (0.27) (0.05)
----- ---------- -----
Change in net asset value 2.73 (4.99) 0.39
----- ---------- -----
NET ASSET VALUE, END OF PERIOD $ 8.13 $ 5.40 $ 10.39
----- ---------- -----
----- ---------- -----
Total return(1) 51.68% (45.83)% 4.37%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $3,481 $2,756 $6,416
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.85% 2.85% 2.85%(2)
Net investment income 0.30% 0.18% 0.06%(2)
Portfolio turnover 38% 44% 9%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.07, $0.10 and $0.15, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of
$0.07, $0.10 and $0.15, respectively.
(7) 1997 distributions were made in accordance with the prospectus; however,
class level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
See Notes to Financial Statements
12
<PAGE>
PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND
INVESTMENTS AT JULY 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
COMMON STOCKS--37.9%
UNITED STATES--37.9%
Amkor Technology, Inc. (Electronics
(Semiconductors))(b).................... 22,000 $ 338,250
Atmel Corp. (Electronics
(Semiconductors))(b).................... 9,000 268,312
Autodesk, Inc. (Computers (Software &
Services)).............................. 5,000 132,500
Bank United Corp. Class A (Savings &
Loan Companies)......................... 4,000 154,000
Black Box Corp. (Electrical
Equipment)(b)........................... 5,800 294,350
C-Cube Microsystems, Inc.
(Communications Equipment)(b)........... 7,000 227,937
Calpine Corp. (Power Producers
(Independent))(b)....................... 5,000 375,938
Cell Genesys, Inc. (Biotechnology)(b)... 28,000 157,500
Charter One Financial, Inc. (Savings &
Loan Companies)......................... 7,000 181,125
Claire's Stores, Inc. (Retail
(Specialty))............................ 11,000 261,250
Commerce Group, Inc. (The) (Insurance
(Property-Casualty)).................... 2,000 51,000
Computer Network (Computers
(Hardware))(b).......................... 12,000 173,250
Crown Castle International Corp.
(Services (Commercial & Consumer))(b)... 10,300 216,944
Cullen/Frost Bankers, Inc. (Banks
(Regional))............................. 7,000 179,812
Dallas Semiconductor Corp. (Electronics
(Semiconductors))....................... 7,000 356,562
Diebold, Inc. (Manufacturing
(Specialized)).......................... 3,500 98,875
Dura Pharmaceuticals, Inc. (Health Care
(Generic and Other))(b)................. 18,000 187,875
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
UNITED STATES--CONTINUED
Eclipse Surgical (Health Care (Medical
Products & Supplies))(b)................ 21,000 $ 287,437
Enhance Financial Services Group
(Insurance (Property-Casualty))......... 2,000 41,500
Fortunecity.Com, Inc. (Computers
(Software & Services))(b)............... 9,000 133,413
Fremont General Corp. (Insurance
(Property-Casualty)).................... 12,000 204,000
Frontier Insurance Group, Inc.
(Insurance (Property-Casualty))......... 7,000 102,813
Fruit of the Loom, Inc. Class A
(Textiles (Apparel))(b)................. 11,000 87,313
Fuller (H.B.) Co. (Chemicals
(Specialty))............................ 1,000 69,500
Furon Co. (Manufacturing
(Diversified)).......................... 10,000 168,750
General Instrument Corp. (Communications
Equipment)(b)........................... 6,000 272,250
Gulf Island Fabrication, Inc. (Oil & Gas
(Drilling & Equipment))(b).............. 7,000 84,000
Health Care REIT, Inc. (REITS).......... 7,500 165,000
Horace Mann Educators Corp. (Insurance
(Property-Casualty)).................... 10,000 251,875
Hospitality Properties Trust (REITS).... 3,000 81,750
LaSalle Hotel Properties (REITS)........ 16,000 239,000
Lennar Corp. (Homebuilding)............. 6,000 117,375
Ligand Pharmaceuticals, Inc. Class B
(Health Care (Drugs-Major
Pharmaceuticals))(b).................... 14,000 141,750
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Phoenix-Aberdeen Global Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
UNITED STATES--CONTINUED
Littelfuse, Inc. (Electrical
Equipment)(b)........................... 4,000 $ 79,000
Men's Wearhouse (The) (Retail
(Specialty-Apparel))(b)................. 6,000 149,250
Metris Companies, Inc. (Consumer
Finance)................................ 1,600 62,900
Network Access Solutions Corp.
(Telephone)(b).......................... 21,000 287,438
Network Associates, Inc. (Computers
(Software & Services))(b)............... 6,500 113,750
New Century Financial Corp. (Financial
(Diversified))(b)....................... 6,000 111,000
RFS Hotel Investors, Inc. (REITS)....... 14,000 176,750
Rush Enterprises, Inc. (Retail
(Specialty))(b)......................... 6,000 111,000
SMART Modular Technologies, Inc.
(Electronics (Semiconductors))(b)....... 15,000 279,375
Sunstone Hotel Investors, Inc.
(REITS)................................. 20,000 182,500
Talbots, Inc. (The) (Retail
(Specialty-Apparel)).................... 7,000 246,313
Texas Industries, Inc. (Construction
(Cement & Aggregates)).................. 4,000 141,000
Trigon Healthcare, Inc. (Health Care
(Managed Care))(b)...................... 6,000 209,250
Valassis Communications, Inc. (Specialty
Printing)(b)............................ 8,000 298,000
ViaSat, Inc. (Communications
Equipment)(b)........................... 8,000 128,000
Washington Federal, Inc. (Savings & Loan
Companies).............................. 6,000 148,125
--------------
8,826,857
--------------
- - ---------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $8,106,412) 8,826,857
- - ---------------------------------------------------------------------------------
FOREIGN COMMON STOCKS--60.4%
ARGENTINA--0.3%
Banco Galicia y Buenos Aires SA (Banks
(Money Center))......................... 5,000 81,250
AUSTRALIA--2.7%
BRL Hardy Ltd. (Beverages
(Alcoholic))............................ 75,000 300,713
Pacifica Group Ltd. (Auto Parts &
Equipment).............................. 75,000 330,588
--------------
631,301
--------------
AUSTRIA--1.2%
VA Technologie AG (Engineering &
Construction)........................... 2,800 273,611
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
BRAZIL--0.3%
CIA Paranaense de Energia Copel
Sponsored ADR (Electric Companies)...... 10,000 $ 68,125
CHILE--0.3%
Distribucion y Servicio SA (Retail (Food
Chains))................................ 4,500 75,375
FINLAND--4.7%
Finnlines Oy (Shipping)................. 7,000 191,048
Rapala Normark Corp. (Machinery
(Diversified))(b)....................... 48,000 359,620
Sampo Insurance Co. Ltd. Class A
(Insurance (Property-Casualty))......... 5,250 152,557
Stora Enso Oyj (Paper & Forest
Products)............................... 24,000 301,824
Teleste Oyj (Telecommunications (Long
Distance))(b)........................... 9,500 83,884
--------------
1,088,933
--------------
FRANCE--2.4%
Altran Technologies SA (Engineering &
Construction)........................... 1,000 244,135
Picogiga (Chemicals (Specialty))(b)..... 4,710 73,096
Societe Industrielle D'Aviations
Latecoere SA (Aerospace/Defense)........ 2,310 241,058
--------------
558,289
--------------
GERMANY--3.7%
Apcoa Parking AG (Services
(Employment))........................... 3,000 232,790
Bewag AG (Electric Companies)........... 11,040 174,287
KM Europa Metal AG (Metal
Fabricators)............................ 7,080 378,885
LOESCH Umweltschutz AG (Services
(Commercial & Consumer))(b)............. 11,568 76,763
--------------
862,725
--------------
HONG KONG--3.1%
Giordano International Ltd. (Retail
(Specialty-Apparel)).................... 751,000 643,453
Magician Industries Holdings Ltd.
(Housewares)............................ 1,500,000 74,406
--------------
717,859
--------------
INDIA--0.9%
ICICI Ltd. Sponsored GDR (Financial
(Diversified)).......................... 20,000 212,500
INDONESIA--1.3%
PT Sari Husada (Foods)(b)............... 275,333 140,943
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix-Aberdeen Global Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
INDONESIA--CONTINUED
PT Tigaraksa Satria (Distributors (Food
& Health)).............................. 350,000 $ 153,570
--------------
294,513
--------------
IRELAND--0.8%
IFG Group PLC (Financial
(Diversified)).......................... 183,300 180,491
ISRAEL--1.9%
Gilat Satellite Networks Ltd.
(Telecommunications
(Cellular/Wireless))(b)................. 4,000 211,000
Koor Industries Ltd. (Manufacturing
(Diversified)).......................... 2,200 229,540
--------------
440,540
--------------
ITALY--1.6%
Banca di Roma (Banks (Major
Regional)).............................. 123,000 160,214
Banca Popolare di Bergamo Credito
Varesino SPA (Banks (Major Regional))... 10,130 203,875
--------------
364,089
--------------
JAPAN--5.6%
FCC Co. Ltd. (Auto Parts & Equipment)... 35,000 597,761
Kawasumi Laboratories, Inc. (Health Care
(Medical Products & Supplies)).......... 29,000 432,619
Nishio Rent All Co. (Financial
(Diversified)).......................... 5,900 64,778
Shinmei Electric (Electrical
Equipment).............................. 12,000 207,038
--------------
1,302,196
--------------
MEXICO--0.8%
Corporacion Interamericana de
Entretenimiento SA Class B
(Entertainment)(b)...................... 45,000 118,828
Industrias CH SA Class B (Iron &
Steel)(b)............................... 21,400 58,788
--------------
177,616
--------------
NETHERLANDS--1.8%
BE Semiconductor Industries NV
(Equipment (Semiconductor))(b).......... 31,250 329,451
ICT Automatisering NV (Electronics
(Component Distributors))............... 4,050 99,265
--------------
428,716
--------------
NORWAY--4.3%
NetCom ASA (Telephone)(b)............... 10,750 352,016
Petroleum-Geo Services (Oil & Gas
(Drilling & Equipment))(b).............. 17,800 363,439
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
NORWAY--CONTINUED
Tomra Systems ASA (Machinery
(Diversified)).......................... 7,840 $ 282,399
--------------
997,854
--------------
PORTUGAL--0.9%
BPI-SGPS SA Registered Shares (Banks
(Major Regional))....................... 10,002 208,750
SINGAPORE--1.9%
Industrial & Commercial Bank Ltd. (Banks
(Major Regional))....................... 78,000 189,061
Robinson & Co. Ltd. (Retail (Department
Stores))................................ 80,000 256,643
--------------
445,704
--------------
SPAIN--5.5%
Adolfo Dominguez (Textiles (Home
Furnishings))(b)........................ 5,700 70,463
Befesa Medio Ambiente SA (Waste
Management)(b).......................... 10,865 138,731
Catalana Occidente SA (Insurance
(Property-Casualty))(b)................. 10,510 232,738
NH Hoteles SA (Beverages
(Alcoholic))(b)......................... 30,485 404,587
Red Electrica de Espana (Electric
Companies)(b)........................... 20,000 166,538
Superdiplo SA (Retail (Specialty))(b)... 12,700 263,700
--------------
1,276,757
--------------
SRI LANKA--0.5%
John Keells Holdings Ltd. (Beverages
(Alcoholic))............................ 48,000 127,476
SWEDEN--2.7%
Artimplant AB Class B (Health Care
(Medical Products & Supplies))(b)....... 32,000 156,102
Haldex AB (Machinery (Diversified))..... 18,000 221,714
Ortivus AB Class B (Health Care (Medical
Products & Supplies))(b)................ 47,300 242,276
--------------
620,092
--------------
TAIWAN--0.6%
Standard Foods Taiwan Ltd. GDR
(Foods)(b).............................. 24,687 151,825
UNITED KINGDOM--10.6%
Access Plus PLC (Services (Commercial &
Consumer)).............................. 85,000 344,252
Charles Stanley Group PLC (Investment
Banking/ Brokerage)..................... 55,600 605,738
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Phoenix-Aberdeen Global Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------
<S> <C> <C> <C>
UNITED KINGDOM--CONTINUED
Gresham Computing PLC (Electronics
(Component Distributors))............... 371,500 $ 583,779
ILP Group PLC (Containers (Metal &
Glass))(b).............................. 260,000 92,665
Rolfe & Nolan PLC (Services (Data
Processing))............................ 100,000 368,553
Wilmington Group PLC (Publishing)....... 108,000 483,767
--------------
2,478,754
--------------
- - ---------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $14,536,225) 14,065,341
- - ---------------------------------------------------------------------------------
UNIT INVESTMENT TRUSTS--0.8%
FINANCIAL (DIVERSIFIED)--0.8%
AMEX Financial Select Sector Depository
Receipts................................ 7,500 183,750
- - ---------------------------------------------------------------------------------
TOTAL UNIT INVESTMENT TRUSTS
(IDENTIFIED COST $178,927) 183,750
- - ---------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--99.1%
(IDENTIFIED COST $22,821,564) 23,075,948
- - ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--1.6%
COMMERCIAL PAPER--1.6%
General Re Corp. 5.15%, 8/2/99.......... A-1+ $ 375 374,946
- - -------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $374,946) 374,946
- - -------------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.7%
(IDENTIFIED COST $23,196,510) 23,450,894(a)
Cash and receivables, less liabilities--(0.7%) (151,899)
--------------
NET ASSETS--100.0% $ 23,298,995
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $3,336,338 and gross
depreciation of $3,151,813 for federal income tax purposes. At July 31,
1999, the aggregate cost of securities for federal income tax purposes was
$23,266,369.
(b) Non-income producing.
20
See Notes to Financial Statements
<PAGE>
Phoenix-Aberdeen Global Small Cap Fund
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF TOTAL VALUE OF
TOTAL LONG-TERM INVESTMENTS
(UNAUDITED)
<TABLE>
<S> <C>
Aerospace/Defense....................... 1.0%
Auto Parts & Equipment.................. 4.0
Banks (Major Regional).................. 3.3
Banks (Money Center).................... 0.4
Banks (Regional)........................ 0.8
Beverages (Alcoholic)................... 3.6
Biotechnology........................... 0.7
Chemicals (Specialty)................... 0.6
Communications Equipment................ 2.7
Computers (Hardware).................... 0.8
Computers (Software & Services)......... 1.6
Construction (Cement & Aggregates)...... 0.6
Consumer Finance........................ 0.3
Containers (Metal & Glass).............. 0.4
Distributors (Food & Health)............ 0.7
Electric Companies...................... 1.8
Electrical Equipment.................... 2.5
Electronics (Component Distributors).... 3.0
Electronics (Semiconductors)............ 5.4
Engineering & Construction.............. 2.2
Entertainment........................... 0.5
Equipment (Semiconductor)............... 1.4
Financial (Diversified)................. 3.3
Foods................................... 1.3
Health Care (Drugs-Major
Pharmaceuticals)...................... 0.6
Health Care (Generic And Other)......... 0.8
Health Care (Managed Care).............. 0.9
Health Care (Medical Products &
Supplies)............................. 4.8
Homebuilding............................ 0.5
Housewares.............................. 0.3
Insurance (Property-Casualty)........... 4.5%
Investment Banking/Brokerage............ 2.6
Iron & Steel............................ 0.3
Machinery (Diversified)................. 3.7
Manufacturing (Diversified)............. 1.7
Manufacturing (Specialized)............. 0.4
Metal Fabricators....................... 1.6
Oil & Gas (Drilling & Equipment)........ 1.9
Paper & Forest Products................. 1.3
Power Producers (Independent)........... 1.6
Publishing.............................. 2.1
Reits................................... 3.7
Retail (Department Stores).............. 1.1
Retail (Food Chains).................... 0.3
Retail (Specialty)...................... 2.8
Retail (Specialty-Apparel).............. 4.5
Savings & Loan Companies................ 2.1
Services (Commercial & Consumer)........ 2.8
Services (Data Processing).............. 1.6
Services (Employment)................... 1.0
Shipping................................ 0.8
Specialty Printing...................... 1.3
Telecommunications
(Cellular/Wireless)................... 0.9
Telecommunications (Long Distance)...... 0.4
Telephone............................... 2.8
Textiles (Apparel)...................... 0.4
Textiles (Home Furnishings)............. 0.3
Waste Management........................ 0.7
-------
100.0%
-------
-------
</TABLE>
See Notes to Financial Statements 21
<PAGE>
PHOENIX-ABERDEEN GLOBAL SMALL CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $23,196,510) $ 23,450,894
Cash 5,274
Foreign currency at value
(Identified cost $184) 192
Receivables
Investment securities sold 216,472
Dividends and interest 30,548
Fund shares sold 12,052
Tax reclaim 5,069
Prepaid expenses 543
-------------
Total assets 23,721,044
-------------
LIABILITIES
Payables
Investment securities purchased 237,635
Fund shares repurchased 47,825
Investment advisory fee 17,324
Transfer agent fee 15,084
Distribution fee 10,632
Financial agent fee 8,109
Trustees' fee 6,557
Administration fee 3,007
Accrued expenses 75,876
-------------
Total liabilities 422,049
-------------
NET ASSETS $ 23,298,995
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 24,095,333
Distributions in excess of net investment income (56,055)
Accumulated net realized loss (994,534)
Net unrealized appreciation 254,251
-------------
NET ASSETS $ 23,298,995
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $14,625,913) 1,468,779
Net asset value per share $9.96
Offering price per share $9.96/(1-4.75%) $10.46
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $8,673,082) 888,096
Net asset value and offering price per share $9.77
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 368,291
Interest 21,788
Foreign taxes withheld (20,068)
-----------
Total investment income 370,011
-----------
EXPENSES
Investment advisory fee 202,386
Distribution fee, Class A 36,420
Distribution fee, Class B 92,421
Financial agent fee 49,573
Transfer agent 73,581
Custodian 57,869
Administration fee 35,715
Professional 35,180
Printing 16,612
Trustees 14,272
Registration 4,264
Miscellaneous 13,218
-----------
Total expenses 631,511
Less expenses borne by investment adviser (62,182)
-----------
Net expenses 569,329
-----------
NET INVESTMENT LOSS (199,318)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (943,423)
Net realized gain on foreign currency transactions 2,658
Net change in unrealized appreciation (depreciation) on investments 1,798,460
Net change in unrealized appreciation (depreciation) on foreign
currency and foreign currency transactions 555
-----------
NET GAIN ON INVESTMENTS 858,250
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 658,932
-----------
-----------
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Phoenix-Aberdeen Global Small Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
7/31/99 7/31/98
------------ -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (199,318) $ (345,457)
Net realized gain (loss) (940,765) 6,452,088
Net change in unrealized appreciation
(depreciation) 1,799,015 (5,764,395)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 658,932 342,236
------------ -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (435,832) (1,634,436)
Net realized gains, Class B (289,554) (1,345,539)
In excess of net realized gains, Class
A (595,185) --
In excess of net realized gains, Class
B (395,424) --
In excess of net investment income,
Class A -- (267,897)
In excess of net investment income,
Class B -- (154,696)
------------ -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (1,715,995) (3,402,568)
------------ -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (543,132
and 303,616 shares, respectively) 5,038,303 3,167,670
Net asset value of shares issued from
reinvestment of distributions
(119,451 and
202,252 shares, respectively) 992,705 1,806,110
Cost of shares repurchased (953,295
and 900,403 shares, respectively) (8,709,664) (9,370,519)
------------ -------------
Total (2,678,656) (4,396,739)
------------ -------------
CLASS B
Proceeds from sales of shares (83,960
and 162,943 shares, respectively) 738,926 1,661,922
Net asset value of shares issued from
reinvestment of distributions
(75,170 and
138,880 shares, respectively) 615,640 1,231,865
Cost of shares repurchased (483,883
and 693,656 shares, respectively) (4,224,626) (7,063,874)
------------ -------------
Total (2,870,060) (4,170,087)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (5,548,716) (8,566,826)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS (6,605,779) (11,627,158)
NET ASSETS
Beginning of period 29,904,774 41,531,932
------------ -------------
END OF PERIOD [INCLUDING DISTRIBUTIONS
IN EXCESS OF NET INVESTMENT INCOME
OF ($56,055) AND ($163,858),
RESPECTIVELY] $ 23,298,995 $ 29,904,774
------------ -------------
------------ -------------
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Phoenix-Aberdeen Global Small Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------
FROM
YEAR ENDED JULY 31, INCEPTION
----------------------------- 9/4/96 TO
1999 1998 7/31/97
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.11 $ 11.08 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.04)(4)(5) (0.07)(4)(5) (0.03)(4)(5)
Net realized and unrealized gain
(loss) 0.52 0.14 1.11
----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.48 0.07 1.08
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net realized gains (0.27) (0.89) --
In excess of net realized gains (0.36) -- --
In excess of net investment income -- (0.15) --
----- ----- -----
TOTAL DISTRIBUTIONS (0.63) (1.04) --
----- ----- -----
Change in net asset value (0.15) (0.97) 1.08
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 9.96 $ 10.11 $ 11.08
----- ----- -----
----- ----- -----
Total return(1) 5.99% 1.86% 10.80%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $14,626 $17,781 $23,874
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.10% 2.10% 2.10%(2)
Net investment income (loss) (0.50)% (0.65)% (0.32)%(2)
Portfolio turnover 81% 212% 162%(3)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------
FROM
YEAR ENDED JULY 31, INCEPTION
----------------------------- 9/4/96 TO
1999 1998 7/31/97
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 11.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.11)(4)(6) (0.14)(4)(6) (0.10)(4)(6)
Net realized and unrealized gain
(loss) 0.51 0.14 1.10
----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.40 -- 1.00
----- ----- -----
LESS DISTRIBUTIONS
Dividends from net realized gains (0.27) (0.89) --
In excess of net realized gains (0.36) -- --
In excess of net investment income -- (0.11) --
----- ----- -----
TOTAL DISTRIBUTIONS (0.63) (1.00) --
----- ----- -----
Change in net asset value (0.23) (1.00) 1.00
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 9.77 $ 10.00 $ 11.00
----- ----- -----
----- ----- -----
Total return(1) 5.22% 1.12% 10.00%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $8,673 $12,123 $17,658
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.85% 2.85% 2.85%(2)
Net investment income (loss) (1.26)% (1.40)% (1.07)%(2)
Portfolio turnover 81% 212% 162%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.02,
$0.03 and $0.05, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of $0.02,
$0.03 and $0.05, respectively.
See Notes to Financial Statements
24
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Aberdeen Series Fund (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company whose shares
are offered in two separate Series. Each Series has distinct investment
objectives.
The New Asia Fund seeks as its investment objective long-term capital
appreciation through investing in equity securities of issuers located in at
least three different countries throughout Asia other than Japan. The Global
Small Cap Fund seeks as its investment objective long-term capital appreciation
through investing in a globally diversified portfolio of equity securities of
small and medium sized companies.
Each Series offers both Class A and Class B shares. Class A shares are sold
with a front-end sales charge of up to 4.75%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Both classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. Income and
expenses of each Series are borne pro rata by the holders of both classes of
shares, except that each class bears distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers, and various relationships between
securities in determining value. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at fair value as determined
in good faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Trust is notified. Interest income is recorded on the accrual
basis. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
Each of the Series is treated as a separate taxable entity. It is the policy
of each Series in the Trust to comply with the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies, and to
distribute all of its taxable and tax-exempt income to its shareholders. In
addition, each Series intends to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Code. Therefore, no
provision for federal income taxes or excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Series on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, foreign
currency gain/loss, Passive Foreign Investment Companies, partnerships,
operating losses and losses deferred due to wash sales and excise tax
regulations. Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. FORWARD CURRENCY CONTRACTS:
Each Series may enter into forward currency contracts in conjunction with the
planned purchase or sale of foreign denominated securities in order to hedge the
U.S. dollar cost or proceeds. Forward currency contracts involve, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. Risks arise from the possible movements in
foreign exchange rates or if the counterparty does not perform under the
contract.
25
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999 (CONTINUED)
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Series as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Series records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. EXPENSES:
Expenses incurred by the Trust with respect to more than one Series are
allocated in proportion to the net assets of each Series, except where
allocation of direct expense to each Series or an alternative allocation method
can be more fairly made.
H. REPURCHASE AGREEMENTS:
A repurchase agreement is a transaction where a Series acquires a security for
cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. The Series, through its custodian,
takes possession of securities collateralizing the repurchase agreement. The
collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Series in the event of
default by the seller. If the seller defaults and the value of the collateral
declines, or, if the seller enters insolvency proceedings, realization of
collateral may be delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Phoenix-Aberdeen International Advisors, LLC ("PAIA" or the "Adviser") serves
as the investment adviser to the Trust. PAIA is a joint venture between PM
Holdings, Inc., a direct subsidiary of Phoenix Home Life Mutual Insurance
Company ("PHL"), and Aberdeen Fund Managers, Inc. ("Aberdeen"), a wholly-owned
subsidiary of Aberdeen Asset Management PLC (previously known as Aberdeen Trust
PLC).
PAIA is entitled to a fee at an annual rate of 0.85% of the average daily net
assets of each Series. Pursuant to sub-advisory agreements, the Adviser
delegates certain investment decisions and functions to other entities. Phoenix
Investment Counsel, Inc. ("PIC"), an indirect, majority-owned subsidiary of PHL,
receives a fee at an annual rate of 0.15% of the average aggregate daily net
assets of each Series from PAIA for providing cash management and other
services, as needed. In addition, PAIA allocates certain assets of the Global
Small Cap Series for management by PIC. PAIA pays a sub-advisory fee to PIC at
an annual rate of 0.40% of the average daily net assets of the Global Small Cap
Series so allocated. PAIA also pays a sub-advisory fee to Aberdeen at an annual
rate of 0.40% of the average net assets of the New Asia Series and 0.40% of the
average net assets of the Global Small Cap Series allocated to Aberdeen by the
Adviser for management.
The Adviser has agreed to reimburse the New Asia Series and the Global Small
Cap Series to the extent that other operating expenses (excluding advisory fees,
distribution fees, interest, taxes, brokerage fees and commissions and
extraordinary expenses) exceed 1.00% of the average daily net assets for Class A
and Class B shares for each Series.
Phoenix Equity Planning Corporation ("PEPCO" or the "Distributor"), an
indirect majority-owned subsidiary of PHL, which serves as the national
distributor of the Trust's shares, has advised the Trust that it retained net
selling commissions of $3,008 for Class A shares and deferred sales charges of
$89,663 for Class B shares for the year ended July 31, 1999. In addition, each
Series pays PEPCO a distribution fee at an annual rate of 0.25% for Class A
shares and 1.00% for Class B shares applied to the average daily net assets of
each Series. The Distributor has advised the Trust that of the total amount
expensed for the year ended July 31, 1999, $122,370 was retained by the
Distributor, $44,591 was paid out to unaffiliated participants and $8,158 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent to the Trust, PEPCO receives a financial agent fee equal to
the sum of (1) the documented cost of fund accounting and related services
provided by PFPC Inc. (subagent to PEPCO), plus (2) the documented cost to PEPCO
to provide financial reporting, tax services and oversight of subagent's
performance. The current fee schedule of PFPC Inc. ranges from 0.085% to 0.0125%
of the average daily net asset values of the Trust. Certain minimums and waivers
may apply. As Administrator for the Trust, Phoenix Investment Partners Ltd., an
indirect, majority-owned subsidiary of PHL, receives a fee at an annual rate of
0.15% of the average daily net assets of each Series for administrative
services.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended July 31, 1999, transfer agent
fees were $128,680 of which PEPCO retained $9,161 which is net of fees paid to
State Street.
At July 31, 1999, PHL and its affiliates held Trust shares which aggregated
the following:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
--------- ------------
<S> <C> <C>
New Asia Fund, Class A............................ 309,003 $2,543,095
Global Small Cap Fund, Class A.................... 588,481 5,861,271
</TABLE>
26
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999 (CONTINUED)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended July 31, 1999
(excluding U.S. Government and agency securities, short-term securities, and
forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------- -------------
<S> <C> <C>
New Asia Fund..................................... $ 3,697,605 $ 4,173,702
Global Small Cap Fund............................. 19,153,033 26,653,639
</TABLE>
There were no purchases or sales of long-term U.S. Government and agency
securities during the year ended July 31, 1999.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a Series' ability to
repatriate such amounts.
5. CAPITAL LOSS CARRYOVERS
At July 31, 1999, the New Asia Fund had a capital loss carryover of $100,079,
expiring in 2006 and $3,177,949 expiring in 2007, and the Global Small Cap Fund
had a capital loss carryover of $725,764 expiring in 2007. These may be used to
offset future capital gains.
Under current tax law, foreign currency and capital losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. For the year ended July 31, 1999, the following foreign
currency and capital losses were deferred:
<TABLE>
<CAPTION>
Foreign
Currency Capital
-------- ----------
<S> <C> <C>
New Asia Fund............................................. $ -- $ 134,909
Global Small Cap Fund..................................... 1,226 253,741
</TABLE>
For the year ended July 31, 1999, prior year losses deferred were utilized as
follows: New Asia Fund $2,689,202 of capital and $13,207 of currency and Global
Small Cap Fund $27,411 of capital.
6. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Series have recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Series and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of July 31, 1999, the
Series recorded the following reclassifications to increase (decrease) the
accounts listed below:
<TABLE>
<CAPTION>
Capital paid
Accumulated in on shares
Undistributed net of
net investment realized beneficial
income (loss) gain (loss) interest
-------------- ----------- ------------
<S> <C> <C> <C>
New Asia Fund......................... $ 33,978 $ (14,333) $(19,645)
Global Small Cap Fund................. 307,121 (3,926) (303,195)
</TABLE>
This report is not authorized for distribution to prospective investors in the
Phoenix-Aberdeen Series Fund unless preceded or accompanied by an effective
prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix-Aberdeen Series Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets, and the financial
highlights present fairly, in all material respects, the financial position of
the New Asia Series and the Global Small Cap Series (constituting the
Phoenix-Aberdeen Series, hereinafter referred to as the "Trust") at July 31,
1999, the results of each of their operations for the year then ended, the
changes in each of their net assets for each of the two years in the period then
ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at July
31, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
September 10, 1999
28
<PAGE>
PHOENIX ABERDEEN SERIES FUND
PART C--OTHER INFORMATION
ITEM 23. EXHIBITS:
a.1 Declaration of Trust of the Registrant filed via Edgar as
Exhibit 1.1 with the Registration Statement on June 24, 1996
and incorporated herein by reference.
a.2 Amendment to Declaration of Trust filed via Edgar as Exhibit
1.2 with Pre-Effective Amendment No. 1 on August 27, 1996 and
incorporated herein by reference.
b.2 None
c.4 Reference is made to Article IV, Section 4.1 of Registrant's
Declaration of Trust referred to in Exhibit a.1.
d.1 Investment Advisory between Registrant and Phoenix-Aberdeen
International Advisors, LLC filed via EDGAR as Exhibit 5.1
with the Registration Statement on June 24, 1996 and
incorporated herein by reference.
d.2 Sub-Investment Advisory Agreement between Phoenix-Aberdeen
International Advisors, LLC and Phoenix Investment Counsel,
Inc. filed via Edgar as Exhibit 5.2 with Pre-Effective
Amendment No. 1 on August 27, 1996 and incorporated herein
by reference.
d.3 Sub-Investment Advisory Agreement between Phoenix-Aberdeen
International Advisors, LLC and Aberdeen Fund Managers, Inc.
filed via Edgar as Exhibit 5.3 with Pre-Effective Amendment No.
1 on August 27, 1996 and incorporated herein by reference.
e.1 Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation, dated November 19, 1997, filed via
EDGAR as Exhibit 6.1 with Post-Effective Amendment No. 2
filed on November 26, 1997 and incorporated herein by
reference.
e.2 Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers, filed via EDGAR as Exhibit 6.2 with
Post-Effective Amendment No. 2 filed on November 26, 1997 and
incorporated herein by reference.
e.3 Form of Supplement to Phoenix Family of Funds Sales Agreement
filed via EDGAR as Exhibit 6.3 with Post-Effective Amendment
No. 2 filed on November 26, 1997 and incorporated herein by
reference.
e.4 Form of Financial Institution Sales Contract for the Phoenix
Family of Funds filed via EDGAR as Exhibit 6.4 with
Post-Effective Amendment No. 2 filed on November 26, 1997 and
incorporated herein by reference.
f. None
g. Custodian Contract between Registrant and Brown Brothers
Harriman & Co. filed via EDGAR as Exhibit 8 with
Pre-Effective Amendment No. 1 on August 27, 1996,
incorporated herein by reference.
h.1 Administration Agreement between Registrant and Phoenix
Investment Partners Ltd., formerly Phoenix Duff & Phelps
Corporation, filed via Edgar as Exhibit 9.1 with
Pre-Effective Amendment No. 1 on August 27, 1996 and
incorporated herein by reference.
h.2 Financial Agent Agreement between Registrant and Phoenix
Equity Planning Corporation dated December 11, 1996 filed via
Edgar as Exhibit 9.2 with Post-Effective Amendment No. 1 on
March 31, 1997 and incorporated herein by reference.
h.3 Transfer Agency and Service Agreement between Registrant and
Phoenix Equity Planning Corporation filed via Edgar as
Exhibit 9.3 with the Registration Statement on June 24, 1996
and incorporated herein by reference.
h.4 Sub-Transfer Agent Agreement between Phoenix Equity Planning
Corporation and State Street Bank and Trust Company filed via
EDGAR as Exhibit 9.4 with Post-Effective Amendment No. 2
filed on November 26, 1997 and incorporated herein by
reference.
h.5 First Amendment to Financial Agent Agreement dated March 23,
1998 filed via Edgar as Exhibit 9.5 with Post-effective
Amendment No. 2 filed on November 26, 1997 and incorporated
herein by reference.
i.* Opinion and consent of Counsel filed via Edgar herewith.
j.* Consent of Accountants filed via Edgar herewith.
k. None
C-1
<PAGE>
l. Initial Capitalization Agreement filed via Edgar as Exhibit 13
with Pre-Effective Amendment No. 1 on August 27, 1996 and
incorporated herein by reference.
m.1 Class A Shares Amended and Restated Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of
1940, filed via EDGAR as Exhibit 15.1 with Post-Effective
Amendment No. 2 filed on November 26, 1997 and incorporated
herein by reference.
m.2 Class B Shares Amended and Restated Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of
1940, filed via EDGAR as Exhibit 15.2 with Post-Effective
Amendment No. 2 filed on November 26, 1997 and incorporated
herein by reference.
n. Financial Data Schedule.
o. Amended and Restated Rule 18f-3 Multi-Class Distribution Plan
filed via EDGAR as Exhibit 18 with Post-Effective Amendment
No. 2 filed on November 26, 1997 and incorporated herein by
reference.
p. Powers of Attorney filed via Edgar with Post-Effective
Amendment No. 4 on September 27, 1999 and incorporated herein
by reference.
- ----------
*Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
None.
ITEM 25. INDEMNIFICATION.
Please see Article V of the Registrant's Declaration of Trust (incorporated
herein by reference). Registrant's trustees and officers are covered by an
Errors and Omissions Policy. The Investment Advisory Agreement Between the
Registrant and its Adviser provides in relevant part that, in the absence of
willful malfeasance, bad faith, gross negligence or reckless disregard of the
obligations or duties under the Investment Advisory Agreement on the part of the
Adviser, the Adviser shall not be liable to the Registrant or to any shareholder
for any act or omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase, holding or
sale of any security.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, directors, officers and controlling
persons of the Registrant and the investment advisers and distributor pursuant
to the foregoing provisions or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a trustee,
director, officer, or controlling person of the Registrant and the principal
underwriter in connection with the successful defense or any action, suit or
proceeding) is asserted against the Registrant by such trustee, director,
officer or controlling person or the Distributor in connection with the shares
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See "Management of the Fund" in the Prospectus for information regarding the
business of the Adviser. For information as to the business, profession,
vocation or employment of a substantial nature of directors and officers of the
Adviser, reference is made to the Adviser's current Form ADV (SEC File No.
801-52167) filed under the Investment Advisers Act of 1940, incorporated herein
by reference.
ITEM 27. PRINCIPAL UNDERWRITER.
(a) PEPCO also serves as the principal underwriter for the following other
investment companies:
Phoenix-Aberdeen Worldwide Opportunities Fund, Phoenix Duff & Phelps
Institutional Mutual Funds, Phoenix-Engemann Funds, Phoenix Equity
Series Fund, Phoenix-Euclid Funds, Phoenix-Goodwin California Tax Exempt
Bonds, Inc., Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.,
Phoenix-Goodwin Multi-Sector Short Term Bond Fund, Phoenix Investment
Trust 97, Phoenix Multi-Portfolio Fund, Phoenix-Oakhurst Income & Growth
Fund, Phoenix-Oakhurst Strategic Allocation Fund, Inc., Phoenix-Seneca
Funds, Phoenix Series Fund, Phoenix Strategic Equity Series Fund,
Phoenix-Zweig Trust, Phoenix Home Life Variable Universal Life Account,
Phoenix Home Life Variable Accumulation Account, PHL Variable
Accumulation Account, Phoenix Life and Annuity Variable Universal Life
Account and PHL Variable Separate Account MVA1.
C-2
<PAGE>
(b) Directors and executive officers of PEPCO are as follows:
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES
PRINCIPAL ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
- ----------------- ---------------- ---------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President Trustee and President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice President, Vice President
100 Bright Meadow Blvd. Chief Financial Officer and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry President, Executive Vice President
100 Bright Meadow Blvd. Retail Distribution
P.O. Box 2200
Enfield, CT 06083-2200
Leonard J. Saltiel Managing Director, None
56 Prospect St. Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Clerk and Secretary
101 Munson St. Mutual Fund
Greenfield, MA 01302-0810 Customer Service
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect St. Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, None
55 East Monroe St. Counsel and Secretary
Suite 3600
Chicago, IL 60603
Jacqueline Porter Assistant Vice President, Assistant Treasurer
56 Prospect St. Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by each principal underwriter who is not an
affiliated person of the Registrant or an affiliated person of such
affiliated person, directly or indirectly, from the Registrant during
the Registrant's last fiscal year.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder will be maintained at the offices of the Registrant located at 56
Prospect Street, Hartford, CT 06115, or its investment adviser, Phoenix-Aberdeen
International Advisors, LLC. One American Row, Hartford, CT 06102, or the
custodian, Brown Brothers Harriman & Co., 40 Water Street, Boston, MA 02109. All
such accounts, books and other documents required to be maintained by the
principal underwriter will be maintained at Phoenix Equity Planning Corporation,
100 Bright Meadow Boulevard, Enfield, Connecticut 06082.
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<PAGE>
ITEM 29. MANAGEMENT SERVICES.
None.
ITEM 30. UNDERTAKINGS.
None.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this registration statement under Rule 485(b)
under the Securities Act and has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Hartford and State of Connecticut on the 24th day of
November, 1999.
PHOENIX-ABERDEEN SERIES FUND
ATTEST: /S/ PAMELA S. SINOFSKY BY: /S/ PHILIP R. MCLOUGHLIN
---------------------- -----------------------
PAMELA S. SINOFSKY PHILIP R. MCLOUGHLIN
ASSISTANT SECRETARY PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated, on this 24th day of November, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C> <C>
Trustee
---------------------------------------
Robert Chesek*
Trustee
---------------------------------------
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer (principal
--------------------------------------- financial and accounting officer)
Nancy G. Curtiss
Trustee
---------------------------------------
Harry Dalzell-Payne*
Trustee
---------------------------------------
Francis E. Jeffries*
Trustee
---------------------------------------
Leroy Keith, Jr.*
/s/ Philip R. McLoughlin President and Director
---------------------------------------
Philip R. McLoughlin
Trustee
---------------------------------------
Everett L. Morris*
Trustee
---------------------------------------
James M. Oates*
Trustee
---------------------------------------
Calvin J. Pedersen*
Trustee
---------------------------------------
Herbert Roth, Jr.*
Trustee
---------------------------------------
Richard E. Segerson*
Trustee
---------------------------------------
Lowell P. Weicker, Jr.*
</TABLE>
*By /s/ Philip R. McLoughlin
------------------------------------------
* Philip R. McLoughlin pursuant to powers of attorney previously filed.
S-1
EXHIBIT i.
OPINION AND CONSENT OF COUNSEL
<PAGE>
[LETTERHEAD]
THE PHOENIX FUNDS
November 23, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Phoenix-Aberdeen Series Fund (the "Fund")
Post Effective Amendment No. 5 to Registration Statement No. 333-5039
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933, as amended, of shares (the "Shares") of the
above-referenced Fund. In rendering this opinion, I have examined such
documents, records and matters of law as deemed necessary for purposes of this
opinion. I have assumed the genuineness of all signatures of all parties, the
authenticity of all documents submitted as originals, the correctness of all
copies and the correctness of all written or oral statements made to me.
Based upon and subject to the foregoing, it is my opinion that the
Shares that will be issued by the Fund when sold will be legally issued, fully
paid, and non-assessable.
My opinion is rendered solely in connection with the Registration
Statement on Form N-1A under which the Shares will be registered and may not be
relied upon for any other purpose without my written consent. I hereby consent
to the use of this opinion as an exhibit to such Registration Statement.
Very truly yours,
/s/ Nancy J. Engberg
Nancy J. Engberg
EXHIBIT j.
CONSENT OF INDEPENDENT ACCOUNTANTS
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 5 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated September 10, 1999, relating to the financial
statements and financial highlights appearing in the July 31, 1999 Annual Report
to Shareholders of the Phoenix-Aberdeen Series Fund, which is also incorporated
by reference into the Registration Statement. We also consent to the reference
to us under the heading "Financial Highlights" in the Prospectus and under the
heading "Additional Information - Independent Accountants" in the Statement of
Additional Information.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 23, 1999